Monday, September 19, 2011

Holy Metrics, Metrics Madness and Metric Insurance

As I review the metrics within many facilities I see two common trends that just don’t work for me, or them. The first is the existence of eternal metrics that have become holy to the site and have been tracked for years with little change in the value or importance. The second is the metric madness that runs rampant in many facilities. It manifest itself as 347 metrics and Key Performance Indicators (KPIs) thrown all over boards, scorecards, and reports which are then delivered to everyone under the sun.
So let us look at holy metrics first. These can get their start when someone benchmarks another site and grabs on to their metrics list or corporate pushes a list down to the facilities without fully understanding the current state of the operation. Metrics and KPIs should be based on the behavior the organization is trying to change. Now don’t misunderstand, I am in favor of a few corporate or “key” performance indicators to benchmark the business but this has to be a short list. I am also OK with having other metrics that calculate based on your data within the Computerized Maintenance Management System (CMMS) or Enterprise Asset Management Systems (EAM) and remain in the background for use in problem solving. Specifically, I am talking about the metrics you use to run the business on a regular basis. These focus metrics need to be part of a short list that is designed to do two things: improve performance and provided “metric insurance.” Metric insurance is the system of checks and balances that insures that when a metric is trending the correct direction we are getting the result we should expect. For example if a measure of reactive work is going down then we would logically expect availability of the assets to be going up. If it is not then we have a something of interest to investigate. It could possibly be a calculation issue or even a bit of metric cheating going on. We have created a list of twenty of these complementary metrics with their relationships that can be used to check results.  It does not display well here but if you would like a copy send me an email and I will send it over. The key point is if your focus KPIs have not changed much in the last few months or years it may be time to remove a few from the focus list and add in a new one that can be directly linked to a business process change you are trying to make. When this metric flat lines it too should be removed and another positive behavioral changing metric should be put into its place.
If you add the new metric but you do not take the focus off of the old one you are left with metric madness as described earlier.  In my ideal world, there should be no more than ten “active” metrics and KPIs in a given area. These can change by area and level as they cascade through the organization but at any one level or department they should have ten or less to focus on. I equate this to something that I experienced recently while watching college football in a large sports bar with over 40 TVs. If each TV represents a metric, then which one do you watch? Where do you put your focus? I found myself jumping from TV to TV and never really getting a good picture of what was going on in any of the games. This can be OK for college football but it does not work at all when you are trying to manage a business.
So to wrap it all up, we need to limit the number of metrics in our focus list of KPIs so we can really put the focus on them. We must make sure that most of the metrics are active and driving behavioral change in the organization not stale and flat lined. We should not forget about the use of metric insurance to verify results are accurate. If we take these guidelines in to account as we structure our metrics program then we will push to higher levels of performance instead of just measuring where we are today.

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