Measures are the lens through which companies can critically examine their strategies and fine-tune their operations. They also foster accountability and can help businesses sharpen their competitive edge.
A measure is a countably additive set function with values in the real numbers or infinity. A measure can be signed or unsigned.
Units of Measurement
A unit of measurement is a definite magnitude of a physical quantity, usually based on a standard. The metric system, for example, is based on the fundamental quantities of meters and kilograms. These units are referred to as base units and serve as the foundation for all other measurements. There are also a number of accepted prefixes that can be used to identify multiples and fractions of the base units. For instance, kilo- denotes a multiple of 1,000; there are thus 1000 meters in a kilometer.
A number without a corresponding unit of measurement is meaningless. For example, a property of something like its height may be expressed in terms of meters or feet but it is important to note which unit is being referenced because the two are not interchangeable. Careful handling of units of measure can improve communication across all stakeholders from engineering to procurement to assembly and manufacturing. Moreover, units of measure are often standardized by industry norms, physical reality and even language and culture.
Measurement Strategy
The measurement strategy is the central document that organizes marketing goals and metrics to create a holistic, full-picture analytics solution. This includes identifying the most important measures, establishing their long-term targets, and back-calculating quarterly and annual goals from these targets.
This process helps your leaders decide which of the many marketing measures they want to actively manage versus just passively monitor. Ideally, they will select the most vital 10 to 20 measures to focus on and use reports like those described in Talent Development Reporting Principles (TDRp) to review plans, target, and year-to-date results.
A measurement strategy also establishes the structure for data collaboration by defining how key metrics will be collected, centralized, and connected across systems. It can help to create a data roadmap that defines what is and isn’t possible, as well as provide clarity for marketers to understand how their efforts connect to strategic objectives. The measurement strategy is a living document that is reviewed and revised periodically.
Performance Measurements
Performance measurement is a process used to collect and analyze data to evaluate progress toward goals, objectives and outcomes. It can be done at an operational, managerial, policy making and community level. It also provides information that can motivate individuals and provide a structured approach to success.
The right measures are critical for strategic management. Measures may focus on the specific activities you want to improve, or they can be more general and reflect the overall well-being of a particular group. The key is that the measures should be tied to the desired strategic outcomes.
Having the right measures allows you to take action and make better decisions. The right measurements can help you avoid wasting resources on activities that don’t contribute to your desired results. They can be used to guide your organization in the right direction, whether that’s increasing sales conversion or providing better care for patients. You should also choose measures that allow you to track the progress of specific projects, divisions or departments.
Variance Analysis
Variance analysis compares actual performance to budgeted or expected numbers, identifying the differences and their underlying causes. This type of accounting process is often used to detect accounting errors or omissions, but it can also help businesses identify ongoing trends that require operational changes. Successful variance analysis requires accurate, up-to-date data and access to both accounting information and operational data.
Variables can arise from changes in volume, price or efficiency, and it’s common for fluctuations to be caused by a combination of factors. For example, a company that manufactures table linens found that it had to buy more raw materials than it expected, resulting in a material expense variance. However, its investment in new sewing and cutting equipment resulted in a positive efficiency variance that partially offset the negative pricing and volume variances.
Conducting thorough variance analysis can take time and resources, which can be challenging in some organizations. To reduce the burden, businesses should prioritize variance analysis for high-impact campaigns and use automation tools to streamline data collection and reduce error rates. They should also provide clear, visual reports to simplify communication of results.