Metrics in business have many applications. Managers will use metrics to reflect costs, productivity, satisfaction levels, and error rates just to name a few. How a manager uses this information can make the difference between a good operation and an outstanding organization.

In many cases, metrics are collected for obvious categories, reported on a regular frequency and end up sitting in a binder on a bookshelf while the management team relies on their "experience" to direct the operation.

Many factors con contribute to this scenario. First, the metrics collected could be inaccurate, thus causing doubt or mistrust in the information. Second, the metrics could be represented in an ineffective manner, making it difficult to "read" the information and draw intelligent conclusions. Lastly, the metrics might not be viewed as a key management tool to help manage and improve the operation.

Metrics by themselves cannot have a material affect on the operation. The management team must understand the data, in terms of trends, how changes affect the data and how the collective information influence strategic and tactical decision-making.

For metrics to be a useful management tool, the senior operation manager must make the commitment to the metrics process. This process has three major components.

1) A commitment to accurate and reliable data

2) A commitment to actively review and openly discuss the data as a management team on a regular basis

3) The flexibility to revise, add or remove data elements or reports to increase the value of the information or to support change in the operation

Once the senior manager has established their commitment to metrics, they can begin to truly leverage the value of metrics across the organization.

An effective metrics program can support personal and departmental objectives, can be utilized to develop and measure annual business or operating plans, and is a very effective means of benchmarking at a peer group or industry level.

But metrics can become an inhibitor to progress in the operation should a manager use metrics in a punitive manner. While a manager must know what is happening in their organization, if the only purpose for collecting and reviewing the data is to punish or criticize, it is unlikely the operation will see material improvement, other than in the specific area which gets the criticism.

By leveraging the information available around metrics, the smart manager will not only be able to affect improvements in those areas where performance is weak, but can also build trust and motivate the organization by sharing the information, providing leadership around goals and the need for improvement, and by demonstrating how the information can have a material affect on performance, quality, service or customer or associate satisfaction.