We live in an age of data. Big data. The ability to collect and use data to make business decisions has become table stakes for any organization looking to gain operational efficiencies, drive innovation, obtain market share, and manage targeted and timely development of human capital. Looking back even five years, a McKinsey Global Institute report communicated the value of big data.
“We estimate that a retailer using big data to the fullest has the potential to increase its operating margin by more than 60 percent. Harnessing big data in the public sector has enormous potential, too. If US healthcare were to use big data creatively and effectively to drive efficiency and quality, the sector could create more than $300 billion in value every year. Two-thirds of that would be in the form of reducing US healthcare expenditure by about 8 percent.” (MGI, 2011)
Over the course of these past five years, we have gained a lot of capability and capacity to help us manage all of this data. And yet, many organizations still feel as though they’re falling behind.
Since my last article about measuring the ROI of culture, I’ve continued to be asked questions from readers about how to get started with measuring the right data. Leaders from all sectors, and organizations small and large have told me: ‘I’m embarrassed to say, but we don’t even know where our people are. We don’t have any data.’
The struggle is real. But it’s not that there isn’t data available. Data is everywhere, if you know what you’re looking for. The real questions we should be asking are:
1. Are we collecting the right information?
2. And what do we do with it once we have it?
What Matters Most
Most of the work I do begins with a problem or opportunity related to organizational performance. There has been a transformational change in the organization or industry, and the workforce needs to adapt to catch up. Or there has been a tragic error or risk event such as fraud—or worse, death—and there is an immediate need to challenge the beliefs and assumptions in how people are approaching their jobs.
Our approach to these challenges is consistent with any problem we might work with a client to solve, and metrics are a key component every step of the way.
There is a common methodology that I follow in my work around culture assessments that can be helpful here. To help us take the first step in mastering measurement of organizational performance, we’ll focus on the first of the two critical questions through this 5 step methodology.
Are we collecting the right information?
Step 1. Assess: When it comes to figuring out what Key Performance Indicators (KPIs) to focus on, assess the organizational environment and stakeholder needs. You have to ask questions, in order to determine which questions to ask. What matters most? What are the strategic priorities of the organization? What are we trying to accomplish, together? What are the ‘care-abouts’ of the executive team? The workforce? The market?
Step 2. Dialogue: Then have a conversation. At this point, you may have a very long list of answers from your initial questions. We would call this list anything but a list of KPIs. They are a list of hopefuls. Organizational performance is the result of the collective workforce operating together toward a common goal. Engage them in the conversation about what matters most. Look for areas of misalignment, or gaps in metrics. Given your list, what story can you tell? Where do you need more information?
Elizabeth Boardman, co-founder of the MilSpo Project, started on this journey when she saw her organization take a sharp upward turn in membership growth. As the numbers grew, the numbers became more important. The stakeholder populations expanded, in size and in number. And in order to sustain that growth, she needed to begin thinking about what information she could communicate, in order to engage those around her in critical objectives, such as securing funding.
Elizabeth began looking at her stakeholders across the country, and researching what was important to them. She used a handy tool we know as ‘Google’ to search for existing data or metrics related to the strategic objectives her organization sought to affect. She perused grants to gain a better understanding of what her funders might be asking for when she approached them for funds.
“Milspo needed to know more about our members, because really knowing our people and having the honest data informs everything. Knowing the numbers helps us better serve military spouses, secure funding, and develop future programs.”
Step 3. Design: This is where the rubber meets the road, or the data hits the spreadsheet. Clients typically enter this step with a laundry list of measures. Decisions haven’t yet been made about exactly what can be, or should be tracked. What key metrics (KPIs) are important to your stakeholders, and reflect the strategic objectives of the organization? The need for investment of time and thought in the design of a measurement plan cannot be underestimated.
Matt Danyliw, Chief Operations Officer of Workscapes, knows the challenges of dealing with inconsistent measures as he works to support coordination of efforts across multiple locations and multiple, interdependent functions that make up his operation. In the spirit of just getting started, Matt considered his long list of measures and focused in on two. His success criteria: what he was already collecting and communicating to stakeholders with regular cadence, and where he has the capability to collect and report on a metric in a consistent way.
As with any culture change effort, process and technology are fundamental to building a sustainable capability.
“In a process that has 1,000 steps, it’s difficult to determine which one is most important, and to develop a KPI that encompasses a significant portion of those steps. What we do relies so much on other people, and so much outside of our control.
“We are starting with two indicators to begin looking at consistency, and efficiency, of our operation. One metric is easy to track, and is the topic of conversation with one of our suppliers on a regular basis. Are we getting a response or not? This is a 0-1 game. We do, or we don’t. It’s easy to get, and it begins momentum of creating a culture where we’re using data to make decisions.”
Steps 4 & 5. Implement & Sustain: Let the fun begin! This is often where I see organizations wanting to start. Building surveys, scheduling focus groups, reporting on data that has been historically collected, just because it’s there. I’m in full support of taking action and building momentum. Doing something is better than doing nothing. But this process should be intentional. Let the work of the previous steps inform this process.
With our KPIs in hand, we know what we have access to, and we know what we need to go get. These steps focus on building data collection tools such as surveys or spreadsheets, and building processes for gathering data in a consistent way, whether manual or automated.
McKinsey Global’s research identifies several issues that “will have to be addressed to capture the full potential of big data. Organizations need not only to put the right talent and technology in place but also structure workflows and incentives to optimize the use of big data. Access to data is critical—companies will increasingly need to integrate information from multiple data sources, often from third parties, and the incentives have to be in place to enable this.”
After you’ve agreed upon what data is relevant for your organization, and designed the system by which you will measure it, its equally important to continue to sustain your measurement system. This is a living process, and should be continuously improved upon as you learn from the data you collect, and the story you’re able to tell. Capture feedback on the usefulness of the data to support stakeholder agendas. Monitor how data is used and what decisions it informs.
This is no longer a task left to business analysts or data scientists. Measurement is a strategic business process, carrying just as much weight as budgeting and financial governance, or supply chain management. The sooner we can get started with deliberately identifying our key metrics, the earlier we will be aware of the potential implications of our culture, leadership behaviors, or change in our work environments.