Long-time readers of this column might imagine I don’t like business metrics. But if you imagine that, you’re wrong. It’s true that my columns on the subject are more cautionary than laudatory. But I love good business metrics, and treasure the rare occasions on which I encounter them.
Most business metrics I run across are either shallow or absent entirely. Mostly, managers adopt industry standard metrics. But it’s okay, because companies are adopting industry-standard business processes as well in their ongoing attempts to become generic.
Last week’s column was an attempt to point the way toward one important goal of a well-designed system of business metrics — the establishment of an organizational dashboard. The critical point, you’ll remember, is to start by defining a conceptual hierarchy of performance goals and sub-goals for the organization as a whole, pointed at the factors required for achieving organizational effectiveness. Metrics are crafted to assess how well you’re progressing toward your goals, not to roll-up from individual performance to workgroup, workgroup to department, and so on.
And especially, the metrics must not be divided according to the organizational chart so as to Hold People Accountable (HPA). When you build a dashboard of key organizational performance metrics, do the opposite: Construct them so as to make the organization’s leaders interdependent. Otherwise, leaders will make their numbers at each others’ expense, the organization will fragment into silos, and nobody will understand why the system collapsed, because all of the metrics looked good.
Still, the absence of HPA leads to its own problems, and without reasonably accurate ways to assess individual and group performance, HPA is an exercise in authoritarian futility: You declare the quality of performance with nothing to back it up; those reporting to you accept your authority to do so without accepting your assessment if it disagrees with their own.
The resolution to this apparent paradox, to the extent it’s resolvable, starts with the recognition that there are two separate, equally valid but entirely different views of the organization. One — the dashboard view — dissects the organization into the factors that drive performance. These cross all boundaries, which is why the organization’s leaders are interdependent when dealing with them.
The other view is functional, divvying up responsibility for who delivers what. It’s the orgchart view — the perspective that leads to HPA.
The organizational chart is a form of delegation. Done right it assigns responsibility and commensurate authority. Doing so without creating organizational silos is one of the most difficult tasks faced by business leaders. Dividing the work of the organization into defined responsibilities and delegating them to various managers so everyone knows who is supposed to do what is, after all, the only known alternative to organizational chaos. Once you do, your managers should establish clear internal organizational goals and metrics of their own, for the same reason you need to do so for the organization as a whole — to understand the health of their organizations.
You can’t entirely avoid the creation of organizational silos, because it is the purpose of the exercise. To illustrate the issue, imagine you have the simplest organizational chart in the IT world — Applications and Operations, and nothing else.
They’re natural enemies. The fastest and most efficient way to code, after all, is sloppily. But this drives up the cost of building and managing the IT infrastructure while increasing the likelihood of system crashes. Meanwhile, the easiest way to maintain stability and performance is to never upgrade or change anything.
Beyond holding managers collectively accountable for dashboard results, you have one more tool at your disposal: remembering the point of it all — in a word, the mission (which is distinct from, and usually independent of the dreaded Mission Statement).
The performance goals, dashboards, organizational chart and all the rest are tools, recognizing that with few exceptions the most effective way to fulfill any mission is to build a high-performance organization capable of its fulfillment.
But in the end it’s the mission — the goal — that’s the point. To avoid the creation of barriers between functional areas of your IT organization, keep the point in front of all managers, always. And establish, clearly, that making the numbers at the expense of the point isn’t making the numbers at all.
It’s inverting means and ends.