The Whys and Hows of Tracking Metrics
Updated: Nov 11, 2020
Can you imagine watching a football game that didn’t have a scoreboard? Or playing a round of golf without tracking your strokes on a scorecard?
Of course not. Then why would you run a business that way? That's why you need to follow the WGMGD mantra.
WGMGD = What Gets Measured Gets Done - “You get what you inspect, not what you expect.” —Favorite mantra of James Arogeti, co-founder HA+W/Aprio
Tracking metrics is vital in helping your company succeed. It should come as no surprise that you’ve got to measure performance to achieve your goals. That’s the clear message of WGMGD: what gets measured gets done.
The "WGMGD Formula"
To achieve your goals, you must track performance, measure the outcomes, and give your people feedback. It’s that simple.
Here are the three steps of the “WGMGD formula”:
Set targets—Set target metrics for specified goals with your key people. Get everyone involved in determining what should be measured to ensure the desired results.
Track results—Track results against the target metrics. This chapter presents a number of tracking tools you can use.
Give feedback—Give regular feedback on the gap between the results and the target. Schedule appropriate meetings and create visual scoreboards that provide ongoing feedback on how results measure against desired outcomes.
Following the “WGMGD formula” helps your company establish target metrics for milestones. As progress gets tracked against the goal, honest, high-quality feedback can be provided to everyone in the company.
By tracking metrics and providing feedback at frequent intervals, your team is able to build trust. By improving communication, everyone can learn how the company is doing and, more specifically, how they are delivering on their own part of the plan.
Tracking metrics is a great first step but picking the best indicators to track is just as important. In order to get the most out of tracking metrics, you have to make sure to pick the right factors to watch. To make tracking most effective, you must:
Measure the right things—If you measure the wrong things, the wrong things will get done. It’s best to focus on positive, growth-oriented measures, like gross profit return- on-sales or gross profit return-on-investment (inventory plus receivables related to a product line). Instead of tracking waste reduction, make the metric (and associated goal) positive: how much good product is produced using the raw inputs. Or track employee retention instead of employee turnover. Another idea is to measure profitable sales growth, not just increased sales revenues.
Measure only a few key indicators—When you ask people to measure twenty or thirty indicators, it causes confusion. Settle on a few key indicators. For example, if the company is tracking thirty key indicators, break down the list so each executive or manager can track a manageable set of five or six targets. The multibillion-dollar company Danaher measures just six metrics to achieve outstandingly high levels of performance.
Provide lots of feedback—It doesn’t do any good to measure something if people don’t know the progress that’s being made toward the goal and their contribution to it. Be consistent and give regular, in-person feedback to tell employees how they’re doing. Feedback can also be in a written document or update, or it can be displayed on scoreboards throughout the facility.
Tracking metrics is a great step to make your business more productive and profitable. When you measure what gets done, then you have a better picture of how your business operates, allowing you to see what works well and what needs to be transformed. By tracking your company's progress, you are more likely to set your business up for success.