Goal setting and how to measure performance

Management 3.0 Module: Metrics & OKRs


How do we measure performance? How do we know we are doing the right things? How do we set aligned goals? This Module is all about measurement. It looks into the question of why we have metrics and what we really want to measure and how.

This Module is based on the twelve guidelines for metrics and also the practice of OKRs. Besides the 12 metrics there are other topics related to metrics like action/vanity metrics and leading and lagging metric are discussed. Values and culture is about behavior, were the metrics and OKRs are more about goal setting in organizations and align organizations.

Before you try to measure someone else’s performance, please explain how you measure your own.

Jurgen Appelo

In his book, Managing for Happiness, Jurgen Appelo says that the way people measure performance in organizations is often “just plain wrong”.

But some of us hate numbers and others struggle with charts. Most people actually have no idea how to measure well. Many companies measure very little, operating with scant insight until they hit a roadblock (or a tree) and are forced to reevaluate.

Not only is measurement one of the most important activities, it can also be easy, fun and motivating. The more you do, the more you’ll want to do and don’t forget that what gets measured gets managed and what gets managed gets done.

So what can we change?

Hone in on the 12 rules of good metrics if you want to establish a culture where people see measurement as a way to learn, improve and create an organization where all workers participate in the metrics ecosystem.

The Twelve Rules for Metrics

1. Measure for a purpose

What gets measured gets managed and what gets managed gets done. You must always understand why you are measuring. The metric is not a goal in itself. It’s just a means to an end. It all starts with why.

2. Shrink the unknown

Not everything is measurable. How can you measure the happiness of a person or your employee? What you can do is measure other small indices and proxies which sum up to a better understanding of the bigger picture.

3. Seek to improve

With all the information and numbers out there (big data) it is easy to look busy. Don’t only measure things that will make you look good. Focus on what enables you to do better work.

4. Delight all stakeholders

You work depends on others, and others depend on you. Never optimize for just one stakeholder. Measure your work from multiple perspectives.

5. Distrust all numbers

Observers usually influence their own metrics and they suffer from all kinds of biases. Have a healthy, skeptical attitude towards any reported numbers.

6. Set imprecise targets

If you set targets for others, they will work against the target instead of working towards the original purpose. Make targets vague and more like a direction and use multiple difficult ones, which are impossible to be achieved altogether.

7. Own your metrics

Everyone is responsible for their own work, and metrics help us improve that work. Therefore, everyone should be responsible for their own metrics.

8. Don’t connect metrics to rewards

As people follow the stick to gain a reward they will lose sight of the original objectives and the bigger picture.

9. Promote values and transparency

Shared values and transparency can reduce the desire to game the system. Make numbers, rules, metrics and purposs transparent for everyone,

10. Visualize and humanize

Don’t present only bare numbers people won’t look at. Make it look nice and fun to interact with.

11. Measure early and often

Measure often enough to ensure problems don’t grow too big and risky, and probably more often than you’re doing now.

12. Try something else

Replace your metrics from time to time to uncover other perspectives and different views.

effective metrics
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Learn more about How to Align Constraints in the Management 3.0 Foundation Module Values and Culture.

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