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More on the design of metrics....Metrics tell people how they are doing. They can be defined at two levels: organizationwide measures of everybody's collective performance, and profession-specific measures of the performance of individuals or small-groups. Organizationwide metrics tell people how well the whole organization is performing, but don't guide individual behaviors. They can be used to build concern for the state of the organization and motivate a desire for change (if they raise concerns), as well as celebrate successes (if they show progress). Profession-specific metrics are required to impact people's day-to-day performance. Profession-specific metrics include, but are certainly not limited to, the annual performance appraisal process. In fact, annual reviews are one of the least valuable forms of metrics. Imagine the oversimplified case of a machine operator who reads a dial and controls a knob. When the dial indicates that the machine is drifting out of tolerance, he adjusts the knob. Now imagine that the dial is moved to the supervisor's office, and the supervisor tells the operator how he did at the end of each year. What are the odds of a quality product? Zero! To have a meaningful impact on results, metrics must be delivered to the people doing the work (not their supervisors). Furthermore, people must get the feedback in time for them to adjust their behaviors. Direct and timely feedback loops, termed "in-process" metrics (as opposed to after-the-fact evaluations), are the most powerful form of metrics. Metrics include both feedback on how things are going, and the targets against which to compare and judge those measures. If your supervisor tells you that your performance deserved a grade of 8, you cannot know if that's good or bad until you know whether that was 8 out of an expected 10 or out of 100. People must have standards against which to judge the metrics of their performance. Thus, the metrics subsystem includes "benchmarks" of performance, i.e., target levels for metrics.
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