Is Single Metric Analysis Misleading?

Tying performance metrics to an organization’s objectives and strategies is an accepted best practice over the last few decades. If the strategy is a blueprint for building an organization, metrics are bricks and concrete. However, focusing intently on a single metric will force the business leaders to overlook other necessary measures. This narrow view will damage an organization in the long term.

In this article at Harvard Business Review, Jonathan Golden explains why a single metric can be misleading.

Why is Single Metric Ineffective?

The performance analysis using a single metric will be appealing since they are easy to understand. In fact, drawing conclusions through a single metric might be quick. However, they are likely to provide a very low-resolution picture of what is going on in an organization. For instance, if business leaders prioritize a single measure of success, such as shareholder value or profit and do everything to maximize it, they will undoubtedly ignore other essential criteria such as customer satisfaction, supplier support, and employee motivation.

Why Should You Create Multiple Metrics?

“Metrics aren’t just a series of numbers; they should be a reflection of your company vision,” says Jonathan. Metrics should define what you want to achieve in the next year to help realize this vision. Using visualization tools to put metrics next to each other will allow you to compare and contrast them. The visualization tools will also help you develop a higher resolution picture of what is going on. Further, it forces teams to think about what matters the most and understand how the constraints will hamper operational priorities.

Remember, no metric is perfect. But, assessing parameters regularly and understanding the relationship between the quality, quantity, and efficiency will help your business stay agile. Besides, digging in and looking at multiple metrics will make your analysis more robust. Metrics, if done right, are one of the best ways to make employees understand how their performance positively impacts the business.

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