Master of All Metrics

To steer the organization forward, they rely on an assortment of nonfinancial performance indicators like customer satisfaction, employee engagement, brand loyalty, market share, and pipeline throughput. Since each leader is held accountable for the performance of his group, he should own the metrics without meddling from above. [...]what if one group’s KPI unknowingly affects the performance of another group’s KPI, as is inevitable? A low days-in-inventory ratio is good news for the chief supply chain officer, but it may cause product stock-outs that result in customer dissatisfaction, bad news for the chief customer officer. 17JanFeb_Metrics_p37aObviously, the achievement of desired scores in one part of the organization must be balanced against different goals in other parts. Why must the CFO and not the chief operating officer, for instance, take on the task? “Most CFOs have basic skills in statistics to determine if the metrics connect to actual company performance and are aligned with strategic goals,” Blake says. “Many CFOs have a clear understanding of the company’s strategy, operating model, customer channels, and competitive challenges to ensure that the right financial and nonfinancial metrics are used to drive performance,” he says. To change the company’s culture, “we needed to look more deeply at what we measured-our key performance indicators (KPIs)-and determine whether any were driving ‘old’ behaviors,” explains Gary Crowe, Ricoh Americas senior vice president and CFO. [...]the company added KPIs to measure the percentage of representatives who were successfully selling services. 17JanFeb_Metrics_p36In addition, for much of its history, Ricoh Americas had...