Received a question the other day:
"If you were allowed to use 3 metrics to operate by, what would they be (and why) if you were: (1) a CEO, (2) a Plant Manager, (3) a Value Stream Manager, (4) a Purchasing Manager, and (5) a Sales Manager."
In true consultant fashion, my unequivocal response is, “It depends.” It depends, in fact, on strategy. Everyone wants profits - strategy tells the organization how to pursue profits, and the right metrics measure how well the 'how' is going. Without strategy driven metrics, you end up measuring everything … and nothing at the same time.
So back to the original question – what are the right/best performance metrics to use? It depends. It depends on the strategy, and the right metrics are those that measure how well the organization is pursuing the strategy in the manner set out by leadership. Without a strategy, any metrics will do since any behavior will get the company nowhere just as well as the behavior driven by any other metrics.
You can read the new article "Fundamentals of Performance Metric here: