10 Characteristics of a Good Measure and 7 Pitfalls to Avoid

In Lean Management
February 22, 2012
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It is not enough to simply create a numeric measure. The measure should accurately reflect the process. We use metrics to base decisions on and to focus our actions. It is not only important to measure the right indicators, it is important to measure them well.

To be effective and reliable, the metrics we choose to use need to have ten key characteristics. The following table was adapted from Keebler (1999) which suggest the qualitites to look for in indicators.

A good measure:	Description:
Is quantitative	The measure can be expressed as an objective value
Is easy to understand	The measure conveys at a glance what it is measuring, and how it is derived
Encourages appropriate behavior	The measure is balanced to reward productive behavior and discourage “game playing”
Is visible	The effects of the measure are readily apparent to all involved in the process being measured
Is defined and mutually understood	The measure has been defined by and/or agreed to by all key process participants (internally and externally)
Encompasses both outputs and inputs	The measure integrates factors from all aspects of the process measured
Measures only what is important	The measure focuses on a key performance indicator that is of real value to managing the process
Is multidimensional	The measure is properly balanced between utilization, productivity, and performance, and shows the trade-offs
Uses economies of effort	The benefits of the measure outweigh the costs of collection and analysis
Facilitates trust	The measure validates the participation among the various parties

Choosing the right metrics is critical to success, but the road to good metrics is fraught with pitfalls. As your endeavors to become more metrics-driven, beware of errors in the design and use of metrics.

Common mistakes include:

Metrics for the sake of metrics (not aligned)
Too many metrics (no action)
Metrics not driving the intended action
Lack of follow up
No record of methodology
No benchmark
Underestimation of the data extraction

Although there may never be a single perfect measure, it is certainly possible to create a measure or even multiple measures which reflect the performance of your system. If the metrics are chosen carefully, then, in the process of achieving their metrics, managers and employees will make the right decisions and take the right actions that enable the organization to maximize its performance. These guidelines will make sure you pick the right indicators and measure them well.