Performance: Without measuring intangibles, you aren’t fully in charge

Impressive organisational outcomes suggest that its mission is being effectively pursued. But how do you determine that a business outcome is good, especially if it doesn’t have financial indicators?

Ordinarily, businesses define success though financial outcomes, but hardly do managers bother to define and measure the events that indirectly drive the financials. If this applies to you, you cannot claim to be fully in charge of the organisation’s destiny.

More businesses and organisations now appreciate the significance of paying more attention to the intangible perspectives that highly influence the bottom line. These perspectives, previously assumed, must be continually assessed to steer them in the right direction. This not only makes it necessary to identify and weight them, but also to define indications of their success well in advance.

Key success measures are the milestones for tracking your organisation’s progress, especially in connection with the defined vision and mission.

Thus, to correctly define them, you must first identify and acknowledge the important clauses in your mission and vision statements, and be alert to the four fundamental business pillars that they must measure. These pillars are work performance, customer satisfaction, profitability, and operations or processes. Within these parameters, key result measures focus on quality, quantity, cost and time. The balanced scorecard works well in designing ways to measure these, including the intangible aspects within them.

The development of key success measures must be pegged on the fact that they are all about outcomes and not the activity. They help managers, especially the micro type, not to worry too much about evaluating activity but the end result. The reality is that it is pointless to subject an activity to a performance measure. Yet many managers spend much time measuring activity (eg, how much time an employee spends in the office or in the field) instead of focusing on the outcome.

Creating and pursuing key success measures within the recognised pillars bring about the necessary transformation in managing performance. Key success measures should not be so many. A number that is close to 10 is considered adequate. They must address the following common interests:

Are they sensitive to customer culture/perception? This has a lot to do with your organisational culture. How much of it resonates well with the discernments of your typical customer?

Are quality issues addressed? Quality measures will help to push performance to desired standards. But these are not created in isolation. They are best developed in reference to what has been established to be in the best interest of the client.

Is the customer happy? Can the key success measure encourage good customer relations and indeed measure the satisfaction levels of the customers? Customer surveys will help in evaluating this aspect.

How about the employees? As the major cog in any organisation, human resource deserves high-level motivational and transformational management. Do you have a measure that determines how well employees are treated versus how they would prefer to be taken care of? Such a tool is necessary.

Don’t forget the financials. The state of the organisation’s health is heavily dependent on solid financial management. As such, it is a key success element.