What you measure is what you get
Measuring is efficient, because an indicator draws attention. Sales grow, profitability improves, turnaround times become shorter – you are more likely to achieve something you are measuring. Indicators are also often linked. If one of your indicators is customer satisfaction, you will get information about improved revenue and profitability as a ‘side product’. That said, why does measuring sometimes not make a company more successful? There are three common and serious mistakes: you might measure the wrong things, not think about the timeframe or forget about qualitative indicators. With these tips from an experienced business owner and mentor, you can minimize potential measuring problems.
1. Choose the correct indicators
What should you measure and which indicators should you use? The answers to these questions are defined by your business’s goals and strategy. Choose your indicators carefully based on your business’s goals and the key points of its strategy. Businesses that launch new products often use an indicator that measures what portion of sales came from the new products. A business that aims to have the best supply chain in their industry will use an indicator that measures the security of supply. A business that wants to increase its role in the value chain will use an indicator that measures how desirable the business is as a partner and so on.
2. Identify short-term and long-term indicators
In the short-term, it might be good to measure things like whether a certain task has been completed. When it comes to the long-term indicators, you should always design an indicator that describes an achieved result or status. In sales work, the indicator is the amount of sales, for example. In customer service, the indicator that measures results is customer satisfaction, and in training activities, the indicator is what people have learned.
3. Remember qualitative indicator
We always associate measuring with numbers. However, quantitative indicators often need qualitative indicators to complete the data used in assessing results. Can people’s well-being be measured with just turnover rates? Can customer satisfaction only be measured with recommendation points? Do a project’s quantitative indicators describe everything about the quality of the work, or should you also ask for a verbal assessment from the party that commissioned the project? Qualitative indicators are also necessary when you are doing something new and do not yet have data.
Päivi Heikinheimo (Master of Science, Business Administration and Management) is an entrepreneur with a long career in different management and consulting positions at companies like Nokia, Ovako Steel and A.T.Kearney. She also works in training, does sparring with small businesses and works as a mentor. Päivi’s newest book, Päätöksen juoni, was published in winter 2021 (Alma Talent). She hosts the podcasts Yritä oikein! and Päätä oikein!
Strong Entrepreneurship project is funded by the European Social Fund. The goal of the project is to develop the economic and self-management skills and competencies of small business entrepreneurs to create better possibilties to subtainable business, growth and better wellbeign.