What gets incentivized gets done first

Metrics are a critical piece of the business to drive the right behaviors. We use metrics everyday in our lives from stoplights to our gas gauge telling us when to get more gas. The same goes for the metrics that we use in our business. The first step is having the right metrics to drive the behaviors of the people that are running the business. Secondly, the metrics need to connect to the customer and at the same time to the vision of the company. Thirdly, they must help each individual be motivated for continuous improvement.

I was with a client where the CEO explained to the production people the EBITDA projections in 3 dimensional graph form. With this example he was able to neglect all three principles. They had no idea how their welding had an effect of the business or how EBITDA connected to the customer or vision, and the graph held absolutely no motivation for them.

If you really want to see a metric change for the better, tie a bonus to it!