Step by Step Metrics Analysis and Use

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Metrics analysis refers to the use of measurable quantities known as metrics in tracking and managing organizational performance. Implemented systematically, it can be a great addition to any manager's toolbox. Check additional information about Metrics Analysis.

Metrics analysis refers to the study and investigation of relevant, measurable quantities or parameters in order to improve organizational performance. It is actually a rather broad designation that can refer to many different approaches to objective strategic management. Essentially, real world data and measurements are gathered and then carefully considered in order to be able to make better informed decisions. Conceptually, this process consists of a number of steps, from goal formulation to implementation to feedback.

In most strategies that make use of metrics, the actual measurement and gathering of data does not come until some planning has been done. That is, the first order of business is usually to formulate some broad goals and objectives for the organization as a whole. These are commonly termed the mission and vision of a company. These would of course differ depending on what field a company is in, and what sort of services and products it offers. But for any organization, it would help to clarify first and foremost what it wants to accomplish as a whole.

Once this vision has been firmly agreed upon, the setting of goals then trickles down the hierarchy. Each department would then be able to set their own objectives in line with the overall objective, then each sub-department, and so on, down even to the individual employee level. This is usually visualized in terms of a strategy map, where the goals at various levels and scales are linked together in terms of relevance and causality. That is, smaller goals would usually support and be important parts of a bigger goal, or a goal may accompany some others.

Then will come the selection of metrics. These are chosen is such a way that they act as indicators of the progress towards achieving particular goals. In most cases, a well-defined goal would already identify some of the parameters that would be a sign of progress. A measurable goal would be framed in terms of a quota in one or more quantities. For example, a sales department might have one of its goals written as "To achieve 15% growth in gross sales over the next year", or "To reach so-and-so amount in cash of net sales". In these cases, "gross sales" and "net sales" are the relevant metrics, respectively.

Once goals are set and metrics determined, next will of course come the implementation of a system to measure and track these indicators. In most cases, although it will depend on the particular organization, this is performed through software interfaces. Data are either gathered by sensors or input by employees, and are then funneled to a central database for processing and analysis. Metrics analysis, or the extraction of information from gathered data, is not the end of the process, of course. The information obtained from the system must be continually applied not only to pending decisions but also to the conceptualization of future improvements. Such a systematic and sustained use of metrics will certainly be a great addition to any performance manager's toolbox.

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