As a businessman, there are aspects in your company that you view as the most important things. These are those that you believe can contribute in the success of the company. Metrics are often used to measure the efficiency of your business when aligned with the goals that you have defined beforehand. As effective and useful as your metrics may seem, there are times when you will doubt its functionality in the business. One of the main reasons to this is because you did not choose to perform the method of cascading metrics.
Now, if you are wondering what cascading metrics approach is, here is the answer: this is a simple way of communicating with all the people in your company about the efficiency and the use of the metrics. You will notify them of what your companys goals are and in line with those objectives, you will give them the metrics that will help them see just how they can achieve those goals. Metrics are like progress bars that will aid them in seeing how far they still have to work in order to achieve a specific objective.
Most of the time, the managers of the company keep the data and the metrics in their offices. They do not allow the metrics to flow into the whole enterprise. Cascading metrics is very useful as it is the solution to communication problems. One of the most measured aspects in the business is the ROI or the return on investment. The cash that you have spent on a particular activity, process or system should go back to your companys vault since this is what having a business is about. C-level executives consider ROI as the most important concern in their business and thus, they need to measure this in the right way so that they will know what they should do when it comes to making decisions in this area.
Another issue that is often measured is the accountability. Key performance indicators have to be chosen carefully in order for a businessman to see how his companys accountability. Aside from this, finance and the internal operations are among the most measured aspects in the business. Now, there are common misconceptions about the creation of metrics. In fact, this is the process that is considered as the most difficult part. In this stage, you will have to identify the essentials in your business without bringing up the other areas that are usually thought of as influential.
Remember to measure the soft numbers instead of the hard ones. This means that you will have to measure those that can bring about hard results. An example of this is when you want to measure the ROI. The return on investment will be much higher if you make sure that your employees and your customers are happy. Therefore, you should be able to gauge the perceptions of the people instead of focusing on the financial numbers themselves. With the aid of the balanced scorecard, cascading metrics will help you gain good financial results without neglecting the other parts of your business.