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Metrics don’t produce business value unless they are related to legitimate business goals. If for example customer satisfaction is your business goal, then a metric that measures customer defects is a good choice and a programmer productivity metric is a poor choice.
Once you have a specific metric in mind, be certain you have known, clean data sources to support it. Collect data and then apply the metric to transform the data into information that reveals trends for decision making. Before committing to the metric, think through possible range of data values and determine in advance the decision criteria that will make sense for your business goals.
Finally, only commit to a metric if you are prepared to take actions based on the trend information. Metrics always require overhead. If you are not willing and able to take action, then don’t bother wasting your team’s energy on the metric. As you will see, there are many excellent metrics cited below. Some of them however are not good choices for many organizations, simply because acting on them is too expensive.
Three categories of metrics that are driven by business goals are
Here is a list of proven metrics grouped according to the business purpose they serve. Afterwards, a case study will reveal the subset that in my experience is most often useful and economical.
http://www.claudefenner.com/content/detail/QAMetricsPage.htm
University of California Approach
Introduction
Performance measurement is an important cornerstone of the contracts between the University of California and the U.S. Department of Energy for the operation of its laboratories. Performance metrics should be constructed to encourage performance improvement, effectiveness, efficiency, and appropriate levels of internal controls. They should incorporate "best practices" related to the performance being measured and cost/risk/benefit analysis, where appropriate.
The Department of Energy has promulgated a set of Total Quality Management guidelines that indicate that performance metrics should lead to a quantitative assessment of gains in:
Customer Satisfaction
Organizational Performance
Workforce Excellence
The key elements of the performance metrics to these guidelines should address:
Alignment with Organizational Mission
Cost Reduction and/or Avoidance
Meeting DOE Requirements
Quality of Product
Cycle Time Reduction
Meeting Commitments
Timely Delivery
Customer Satisfaction