Measures are the short units into which a piece of music is broken by composers for the sake of easier sight-reading. They are often indicated by bar lines.
While the research community is familiar with the power and value of summary measures, their application in the policy arena has lagged behind. This workshop will explore the potential of integrating these metrics into policy and planning decisions.
Measurement
Measurement is an essential part of science, commerce, and everyday life. Philosophers, however, have disagreed about what constitutes measurement and whether certain properties are measurable.
Traditional characterizations of measurement emphasized its theory-ladenness. They argued that without some substantive assumptions about the property being measured, it is impossible to interpret the indications of measuring instruments and so determine their evidential value.
Modern authors have characterized measurement in terms of information. This construal was inspired by developments in metrology, the scientific study of physical measurement and standardization. It argues that the information conveyed by an instrument’s readings depends on the structure of a model underlying those readings, and thus can be evaluated using the principles of information theory.
Some contemporary philosophers have defended realism about measurement, arguing that some of the properties that are believed to be measurable really exist independently of our beliefs and conventions. For example, a statement such as “two sizes are equal” is first and foremost about their size ratios, rather than about the individual sizes of the objects involved (Campbell 1920; Swoyer 1987). This construal is sometimes called fundamental measurement theory.
Metrics
Metrics focus on a particular aspect of business and measure performance against specific objectives. These metrics can be as broad as company profit, or as narrow as lead time for software deployment. They are also typically lower level indicators than KPIs.
For example, a manufacturing company may track its inventory turnover, number of lateral promotions and other metrics to understand how these activities impact production efficiency. The more scrap a team generates, the less efficient they are, which could mean higher manufacturing costs or poor customer satisfaction.
It is important to note that metrics can be misleading. For example, if an employee is focused on generating more revenue, they might focus on cutting corners in order to meet their sales goals. This is known as a vanity metric, and it can be detrimental to the overall quality of your business process. This is why it is important to choose the right metrics for your business.
Variance Analysis
Often, businesses will compare actual results with budgeted results and analyze the differences. This enables them to understand why they may be over- or underperforming, which is essential for directing resources to correct problems or capitalize on opportunities.
Variance analysis can be conducted for a number of elements, including the price and quantity of materials and labour. The basic formula is the standard cost minus the actual cost, which can reveal many potential areas of improvement for a business.
For example, if your company is spending more than expected on overhead costs, it can be a good idea to review why these expenses are higher than usual to find ways to cut costs. However, it is important to note that variance analysis is not a quick process. The accounting team will need to gather data from bills of materials, labor routings, and overtime sheets in order to conduct a detailed variance analysis each month. This time delay can cause red flags to be missed if an issue is not addressed quickly.
Strategic Planning
Strategic plans focus on a vision for the future and set goals with time horizons of three to five years or more. They often involve a SWOT analysis of strengths, weaknesses, opportunities and threats for the company.
A business must regularly collect data on its KPIs to monitor progress toward the strategic plan. This data can come from internal sources such as financial reports and customer surveys or external ones such as industry reports and competitor analyses.
A strategic plan defines performance to be measured, and a performance measurement system provides the feedback that keeps the strategic planning process on track and adaptable to environmental changes. This relationship between strategic planning and performance measurement forms a continuous circle of governing-for-results. Ensure that both processes are driven by clear and realistic objectives. Then, use a clear and consistent language to communicate them. Use the same words, definitions and metrics across the organization to avoid confusion. This will enable the organization to share and compare information.