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Predictive Performance Indicators
No one knows what will happen in the future. There are, however, observable behaviors and interim results that serve as precursor markers signaling probable organizational outcomes. Performance indicators monitoring these precursors therefore provide early insight to likely outcomes; enabling leaders to proactively take those actions necessary to capitalize on opportunities and avoid undesired events. Thus, precursor indicators, particularly those focused on critical performance attributes, are of great value to the organization.
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About the Author
Nathan Ives is a StrategyDriven Principal and Host of the StrategyDriven Podcast. For over twenty years, he has served as trusted advisor to executives and managers at dozens of Fortune 500 and smaller companies in the areas of management effectiveness, organizational development, and process improvement. To read Nathan’s complete biography, click here.
Implementation of performance metrics or the alteration of an existing metrics represents change. These changes often expose previously unseen data; producing unexpected information and bringing to light both performance inefficiencies and errors in captured data. Consequently, performance reflected by the new or updated metrics may be erroneous; necessitating further investigation and possible corrective action.
Performance metrics that drive no action provide little or no value to an organization. To be truly effective, performance measures must individually or collectively prompt action whereby an opportunity is seized upon or a risk avoided. Thus, high-quality organizational performance measures are directly linked to actions – but what actions, performed by whom, within what timeframe?
Because resources are always limited and there is no free lunch, too much of any one thing can be bad.
Performance measures reflect the organization’s successes and shortfalls over extended periods of time. Well-maintained metrics include a periodic performance analysis summary capturing underlying drivers and associated follow-on actions. These summaries, however, are typically overwritten with the next analysis rather than being preserved; robbing leaders of critical lessons learned information that could support future performance improvements and more rapid decision-making.
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