Measure selection

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[5.2.7] Measure selection
Measure selection
In the last section I may have been a bit glib with regard to measure selection. When organisations arrive at a strategy map or strategic linkage model they do have a basis for measure selection; however, there is still quite a bit of work to be done in selecting a useful set of measures. This lesson will outline the work required.
What is a measure?
Measures help you determine whether the activity or outcome is being achieved.
How many measures?
You can have as many as you like but to be manageable, in real life, one to three measures should be chosen for each activity or outcome. (Remember the earlier argument of mis-focusing on the quantity of measures rather than their quality or the ability to manage them?)
Good measures are:
Appropriate: They tell you whether or not you have achieved your outcome or completed an activity satisfactorily.
Available or easily obtained: Collecting data can be expensive and time consuming.
Frequently available: The timing of the data needs to be in line with the speed of management response needed, for example, the speed with which a University turns around assessed work. It might sound simple initially, but has to reflect not only on student expectations and staff resources but also the difference between say in-module and final assessments and the difference in timings and structure between on-campus and distance learning programmes.
Choosing measures
When choosing a measure, we need to track both the effort we are putting-in (activity) and the result (outcome) i.e.,’bang for bucks’, as shown in this simple example below.
Choosing activity measures
Activity measures should track whether we are doing enough of the activity. In the extract from the strategic linkage model shown, Activity 4 (A4) is an activity to ‘ensure staff are competent, motivated and compensated’. We need to measure the ‘doing’ of this activity. For A4, the measure might be something like ‘progress against a project plan to improve benefits’, or perhaps ‘per-head training budget spend  or ‘days training provided’. The measures would be partial, in that they would not capture everything of interest to us. So it might be wise to choose more than one measure.
Choosing outcome measures
Outcome measures need to track the effect of carrying out the activities: The managers who created the SLM assumed that carrying out A4, would result  in the medium term with Outcome 6: ‘Skilled and Motivated Staff’. So we need to measure that which that will let us assess the outcome and the assumption. For O6, such a measure might be: a staff survey, a skills audit or staff turnover. The longer term outcomes, O3 and O1, could be measured by market surveys and the financial accounts, respectively.
Checking measures systematically
In Chapter 12 of the textbook there are checklists to guide measure selection. Over the years, I have found it useful to use forms to ensure that I check properly. A measure selection form is below. This is extracted from the Chili Airways case in Chapter 12.  
Using the measure selection form
The form forces me to consider the following:
Name
The name of the measure
Does the name capture the essence of what is being measured? Will the name easily translate to an understandable concept for every person who has to use the measure?
Performance management system meetings require decision making consensus on a variety of different areas. Achieving this consensus is aided by simple and accessible measure descriptions. Even if the measure is of a technical nature, it is worth trying make the name mean sense in ‘everday’ terms.
The ‘notes and assumptions’ section of the measure definition form is a useful place to include such explanations.
REMEMBER . You, as a functional expert, may know exactly what is behind a given measure, but you colleagues may not. Help your fellow colleagues make informed decisions about their measures.
Purpose
The purpose of the measure
Is there a clear relationship between the measure and the associated Strategic linkage model objective?
Does the measure provide a reliable and useful indicator of whether a particular outcome is being achieved or whether an activity is being carried out as planned?
Measures are at best partial indicators of the state of phenomena of interest. It may be that to track the state of an activity or outcome objective, several measures are required. Each should have a transparently observable link to the relevant objective. Such links are a test of the validity and purpose of the measure, and the more transparent they are, the more likely it is that your colleagues will understand the measure.
The formula
How is the performance measure calculated?
Is the formula expressed with sufficient precision? Are the terms adequately defined?
A formula need not be a complex mathematical device. For example, in a project environment it might be a simple statement in English: ‘milestones achieved versus milestones planned’. Or in a retail environment the formula might be the number of complaints per day.
Behind each term will need to be a more detailed definition; in our examples, the project plan or what constitutes a complaint.
An example of calculation is always useful.
Again, remember your audience, which might include non-experts. You are sharing the measure of interest so that you can make decisions as a group, If a formula is complex make sure that adequate explanation of its use is provided.
Units
Is the measure expressed in appropriate (the correct?) units?
Is the measure expressed in appropriate (the correct?) units? For example, %, survey result, milestone achievement, £, $, counts, etc.
A number by itself is not so useful as a number with a context. So, revenue/month, revenue in May, counts/day, and so on. If the formula is applied properly then the units (and implicit context) logically follow. However, in my experience managers often forget to write down the units.
Where the measure formula is a ratio, it is often useful to express this as a percentage.
Data sources
Has the measure data source been specified sufficient to allow consistent capture and use?
Can the nominated measure reporter find the data quickly and easily.
Is the description of data and means of collection specified to allow consistent collection?
Can capture be automated? Are the data already there in the corporate network, or does some new routine have to be written to retrieve the information?
Its easy to say ‘customer satisfaction survey results’ in a measure formula, and easy to forget that a great deal of effort may be required to design and administer a survey. Do you really want to commit to ongoing collection of survey information. Might there be an easier way?
Similarly, with project milestones as measures, the implication is that someone has to design the project plan.
The point here is not to avoid using complex instruments as data sources, but to be aware of the often hidden, underlying complexity of some data sources. In particular, be aware of the costs of collection.
Finally, also be aware of the ‘other side of the coin’. Don’t use a measure just because it is there!
Availability
Is the measure currently available or not?
Ensure that any remaining tasks implicit in the answers to this question are summarised on the measure definition form.
Sometimes the development of a measure is a project in itself!
If the measure data are already available, then it might be useful to look at archival data for target setting purposes.
Who measures?
Is the nomination of a particular individual or group as the measure collector appropriate?
Are the data available to them? Are the data going to be time-consuming or otherwise costly to collect? Has this expense been budgeted for? Does anyone involved in measure collection require training?
Unintended consequences?
Might this measure influence behaviour inappropriately?
Can you envisage any unwanted behaviours resulting from this measure, i.e., behaviour that makes the measure change in the ‘right’ direction, but that has a detrimental impact on the organisation as a whole?
[5.2.7] Measure selection
Measure selection
In the last section I may have been a bit glib with regard to measure selection. When organisations arrive at a strategy map or strategic linkage model they do have a basis for measure selection; however, there is still quite a bit of work to be done in selecting a useful set of measures. This lesson will outline the work required.
What is a measure?
Measures help you determine whether the activity or outcome is being achieved.
How many measures?
You can have as many as you like but to be manageable, in real life, one to three measures should be chosen for each activity or outcome. (Remember the earlier argument of mis-focusing on the quantity of measures rather than their quality or the ability to manage them?)
Good measures are:
Appropriate: They tell you whether or not you have achieved your outcome or completed an activity satisfactorily.
Available or easily obtained: Collecting data can be expensive and time consuming.
Frequently available: The timing of the data needs to be in line with the speed of management response needed, for example, the speed with which a University turns around assessed work. It might sound simple initially, but has to reflect not only on student expectations and staff resources but also the difference between say in-module and final assessments and the difference in timings and structure between on-campus and distance learning programmes.
Choosing measures
When choosing a measure, we need to track both the effort we are putting-in (activity) and the result (outcome) i.e.,’bang for bucks’, as shown in this simple example below.
Choosing activity measures
Activity measures should track whether we are doing enough of the activity. In the extract from the strategic linkage model shown, Activity 4 (A4) is an activity to ‘ensure staff are competent, motivated and compensated’. We need to measure the ‘doing’ of this activity. For A4, the measure might be something like ‘progress against a project plan to improve benefits’, or perhaps ‘per-head training budget spend  or ‘days training provided’. The measures would be partial, in that they would not capture everything of interest to us. So it might be wise to choose more than one measure.
Choosing outcome measures
Outcome measures need to track the effect of carrying out the activities: The managers who created the SLM assumed that carrying out A4, would result  in the medium term with Outcome 6: ‘Skilled and Motivated Staff’. So we need to measure that which that will let us assess the outcome and the assumption. For O6, such a measure might be: a staff survey, a skills audit or staff turnover. The longer term outcomes, O3 and O1, could be measured by market surveys and the financial accounts, respectively.
Checking measures systematically
In Chapter 12 of the textbook there are checklists to guide measure selection. Over the years, I have found it useful to use forms to ensure that I check properly. A measure selection form is below. This is extracted from the Chili Airways case in Chapter 12.  
Using the measure selection form
The form forces me to consider the following:
Name
The name of the measure
Does the name capture the essence of what is being measured? Will the name easily translate to an understandable concept for every person who has to use the measure?
Performance management system meetings require decision making consensus on a variety of different areas. Achieving this consensus is aided by simple and accessible measure descriptions. Even if the measure is of a technical nature, it is worth trying make the name mean sense in ‘everday’ terms.
The ‘notes and assumptions’ section of the measure definition form is a useful place to include such explanations.
REMEMBER . You, as a functional expert, may know exactly what is behind a given measure, but you colleagues may not. Help your fellow colleagues make informed decisions about their measures.
Purpose
The purpose of the measure
Is there a clear relationship between the measure and the associated Strategic linkage model objective?
Does the measure provide a reliable and useful indicator of whether a particular outcome is being achieved or whether an activity is being carried out as planned?
Measures are at best partial indicators of the state of phenomena of interest. It may be that to track the state of an activity or outcome objective, several measures are required. Each should have a transparently observable link to the relevant objective. Such links are a test of the validity and purpose of the measure, and the more transparent they are, the more likely it is that your colleagues will understand the measure.
The formula
How is the performance measure calculated?
Is the formula expressed with sufficient precision? Are the terms adequately defined?
A formula need not be a complex mathematical device. For example, in a project environment it might be a simple statement in English: ‘milestones achieved versus milestones planned’. Or in a retail environment the formula might be the number of complaints per day.
Behind each term will need to be a more detailed definition; in our examples, the project plan or what constitutes a complaint.
An example of calculation is always useful.
Again, remember your audience, which might include non-experts. You are sharing the measure of interest so that you can make decisions as a group, If a formula is complex make sure that adequate explanation of its use is provided.
Units
Is the measure expressed in appropriate (the correct?) units?
Is the measure expressed in appropriate (the correct?) units? For example, %, survey result, milestone achievement, £, $, counts, etc.
A number by itself is not so useful as a number with a context. So, revenue/month, revenue in May, counts/day, and so on. If the formula is applied properly then the units (and implicit context) logically follow. However, in my experience managers often forget to write down the units.
Where the measure formula is a ratio, it is often useful to express this as a percentage.
Data sources
Has the measure data source been specified sufficient to allow consistent capture and use?
Can the nominated measure reporter find the data quickly and easily.
Is the description of data and means of collection specified to allow consistent collection?
Can capture be automated? Are the data already there in the corporate network, or does some new routine have to be written to retrieve the information?
Its easy to say ‘customer satisfaction survey results’ in a measure formula, and easy to forget that a great deal of effort may be required to design and administer a survey. Do you really want to commit to ongoing collection of survey information. Might there be an easier way?
Similarly, with project milestones as measures, the implication is that someone has to design the project plan.
The point here is not to avoid using complex instruments as data sources, but to be aware of the often hidden, underlying complexity of some data sources. In particular, be aware of the costs of collection.
Finally, also be aware of the ‘other side of the coin’. Don’t use a measure just because it is there!
Availability
Is the measure currently available or not?
Ensure that any remaining tasks implicit in the answers to this question are summarised on the measure definition form.
Sometimes the development of a measure is a project in itself!
If the measure data are already available, then it might be useful to look at archival data for target setting purposes.
Who measures?
Is the nomination of a particular individual or group as the measure collector appropriate?
Are the data available to them? Are the data going to be time-consuming or otherwise costly to collect? Has this expense been budgeted for? Does anyone involved in measure collection require training?
Unintended consequences?
Might this measure influence behaviour inappropriately?
Can you envisage any unwanted behaviours resulting from this measure, i.e., behaviour that makes the measure change in the ‘right’ direction, but that has a detrimental impact on the organisation as a whole?

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