Doing better at measuring intangible results depends on creating good practices, says Stacey Barr.
By Stacey Barr
Organisations and companies of all kinds need to show objective evidence of their performance, to prove they’re making their intended difference in the world.
Owners who want a return on their investment care about this, but they are not the only ones. Customers, employees and governments all want their organisations to perform, too.
Performance means more than profits; it also means building the intangible value that the organisation seeks to create. This can be produced for the benefit of the broader society, but it often yields real long-term financial value for the owners, too.
Google’s reputation as the “don’t be evil” company, for instance, makes people more willing to trust it with their data, which is the key to much of its market value as a business.
Intangible results, however, are notoriously hard to measure meaningfully – it is a common challenge the world over.
Here are the three biggest struggles facing those who seek to meaningfully measure what matters.
1. People feel threatened by measurements.
Consequently, they shift into defensive behaviours. That’s why they sweep performance problems under the rug, why they manipulate data to look good, why they only want to measure their effort and not results.
2. We have hard-to-measure goals.
We might have goals such as to “enhance the sustainability of our environmental impact” or “embrace a culture of diversity and collaborative innovation” or “optimise productivity”. In truth, these goals are too intangible, too broad, too visionary, and so they’re too hard to anchor down with measures.
3. We have lame measures that aren’t useful to anyone.
They count trivial things, or they’re simply milestones of completing a task, or they’re too vague to quantify. Counting the kilograms of waste paper recycled might be easy, but it isn’t evidence of “environmental impact”.
On-time completion of a “collaboration for innovation” training program provides no evidence at all about how much “collaborative innovation” is resulting. A “Staff Productivity Index” might sound scientific, but it’s all fantasy if no-one knows what it means or how to quantify it.
Accounting for non-financial assets – this course covers the knowledge and skills required to understand and apply the recognition, measurement and disclosures required for non-financial assets.
All of these struggles are caused by bad habits in setting out key performance indicators (KPIs). These bad habits need to be replaced with practices that work better. Here are some suggestions:
- The struggle of people feeling threatened by measures is caused by the bad habit of using measures to judge people’s performance. When people feel that the measures are about them, they will understandably get defensive. We need to reframe performance measures as tools to help people improve business processes. We want measures to be a tool in their hands, not a rod for their backs.
- The struggle of goals seeming impossible to measure almost always comes back to the words chosen to write those goals. The worst words we can use are weasel words: accessibility, benefits, capacity, dynamic, efficient, innovative, key, leveraged, productivity, reliability, sustainable, transparent, wellbeing. The problem with weasel words is that they aren’t specific and observable, so they can’t be measured. We’re not dumbing-down our goal by writing it in plain, observable language that a fifth-grader could understand. If we can’t observe it, we can’t measure it.
- The struggle of performance measures that are lame or useless is caused by the way we go about choosing them. The worst culprit is brainstorming; it’s a creativity tool, and choosing performance measures isn’t about creativity.
We need a process that deliberately narrows down our options so that we can choose the strongest evidence of our goal. Evidence has to be observable. When we know the evidence, we can then quantify it.
Measuring what matters – even the intangibles – doesn’t have to be a struggle. It becomes much easier when we shed these bad habits and clear the path to meaningful, understandable and helpful KPIs.
Consultant and author Stacey Barr specialises in organisational performance measurement and KPIs. Her 2014 book Practical Performance Measurement is available at Amazon.
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