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How To Select The Right Strategic Measures
You’ve set your objectives—but you need to be able to evaluate them with measures. Find out how to set the right strategic measures in this article.
You’ve created and written out your strategic objectives—which is a great first step. But now you need to know how to measure the success of your strategic plan, and measures are the best indicator of your performance. Think of your strategy as a plane—without altitude, speed, and directions, the plane is useless! The same is true for measures—which should always help progress your objectives, even if indirectly.
Strategic measures are used to track your progress in achieving your objectives and goals. For example, if your objective is to retain current customers, you’ll ask yourself, “How are we doing toward meeting this particular goal?” The answer to that question is the measure. In this example, it may be your customer renewal percentage going up or down.
With this in mind, here are some helpful tips you can put into practice for selecting the right strategic measures.
How To Select The Right Strategic Measures: A Few Things To Keep In Mind
The Qualities Of A Good Strategic Measure
- Quantifiable: Making sure your measures are objective (based on statistical fact) and not subjective (based on instinct or “gut feel”) is critical.
- Understandable: It should take someone in the organization less than a second to understand how you’ve performed on a measure and less than 10 seconds to understand the analysis or recommendations. Easy-to-read charts and graphs that can be quickly consumed are key for this.
- Actionable: You don’t want to choose measures you can’t impact. It’s important that your employees feel they can influence the measure through normal work or specific projects you put in place.
- Repeatable: You don’t want the measure to be useful only once. You should be able to track progress on the measure over time so you can analyze critical trends. If you look at a slightly different measure each month, you will not be able to chart it.
- Timely: At the very least, strategic measures should be looked at annually, and at the most, monthly. Any time frame longer than that makes it difficult to tie the measure in with your strategic plan.
The Difference Between Outcomes & Drivers
- Outcomes are results-oriented measures. It is difficult to have an impact on these measures directly, but they should give you a clear indication of whether the objective (or strategy) is being achieved.
- Drivers are input-oriented measures. Progress against these measures should have an impact on the outcome measures. Sometimes people refer to these as leading indicators. Drivers measure the activities that are taking place that should influence the outcome measures.
Guidelines To Follow When Choosing Your Measures
- Be sure to have at least one outcome measure for each strategic objective in the “Customer” and “Financial” perspectives.
- Remember that driver measures are assigned primarily to the “Internal” and “Learning & Growth” perspectives.
- If more than one measure is applicable, use the measure that best communicates the meaning of the objective.
- Don’t create more than 25 measures (or 1-2 measures per objective). Any more than that makes it difficult to figure out how you’re doing, because measures may have conflicting performances.
Case Example: Teach For America
About 10 years ago, Teach For America created a Balanced Scorecard. This case example represents their strategic measures at the time and how they tie to each of their objectives. Note that some of the measures and objectives have been simplified. (You can view an example of their Balanced Scorecard in this article.)
Information To Include In Your Measure Template
The best way to capture your measure information is by having and using a measure template. The chart below represents a simple template that can be used by filling in the answers on the right hand side. Measure templates are valuable because they help you to realize the strength of your measure and help you communicate your thinking behind the three to five word measure name.
The Next Step: Setting Your Measure Targets
Key performance indicators (KPIs) or measure targets are used to communicate the level of performance you’re trying to achieve. There are three critical steps in setting these targets:
- Set your long-term or “stretch” target.
- Determine your leading and lagging indicators, and make sure the two are linked together.
- Define how you back into your annual and quarterly targets based on your long-term target.
These steps are broken down in-depth in our article How To Set KPI Targets.
If you’re still unsure of your strategic performance management—or if you just need some inspiration—check out our KPI libraries for some ideas: