Measures are the units by which things are counted. For example, a meter is the unit of length. A gram is a unit of weight.
In mathematics, a measure is a set function having the properties of sigma finiteness and finite additivity. The union of countably disjoint sets whose measure is a certain value is called a measurable space.
Measures and Metrics
Metrics are quantifiable data points that are used to track and assess specific processes. They are essential building blocks for KPIs (Key Performance Indicators) and they provide the context for evaluating business performance.
The use of metrics has had some notable successes, but there are also well-publicized failures of metrics and perverse incentives they create. Campbell and Goodhart noted that when a metric is chosen after the actions it is intended to measure, participants may exploit the resulting information asymmetries.
The success of metrics depends on clear, coherent goals and considerations of how these will lead to the measurable parts of the system. It also requires careful evaluation of the evaluability of metrics to ensure they are not being used to manipulate or incentivize certain behavior. Finally, it is often necessary to aggregate measures to make them evaluable. This introduces additional information asymmetries and can sometimes make the goals incoherent. However, there are ways to avoid these issues with forethought and consideration of desiderata.
Measuring Business Performance
Effective business performance measurement helps companies stay on course toward achieving their goals. It can also help them identify operational issues and opportunities for improvement, hold people accountable and incentivize success.
Business metrics should reflect key objectives and priorities, as well as the ways that different departments interact with one another. They should also be able to provide insights that can help a company adjust its strategies and tactics to meet changing market conditions.
For example, a sales revenue metric evaluates how much income is generated per square foot of sales space, which can assist retailers in improving their efficiency and identifying opportunities to increase sales. Another example of a critical business metric is a patient satisfaction score, which assesses how satisfied patients are with the quality of care and services received at healthcare facilities.
Businesses should also consider including a mix of leading and lagging indicators in their performance metrics. Unlike leading indicators, which focus on activities that will have an impact on future results, lagging indicators are based on past outcomes.
Choosing the Right Metrics or Benchmarks
Metrics and measures have made evaluation possible and contributed to improvements in business systems, medicine, academia, and more. Unfortunately, they are often misused or exploited. Forethought in the design of metrics can prevent exploitation and provide more reliable, actionable insights.
The most important consideration is to choose metrics that align with your goals and objectives. You should also consider the industry relevance of the metrics you select, as well as their measurability and availability. Finally, you should be sure the metrics are clear and easy to understand.
Reliable and valid metrics are essential to the success of any measurement system. In order to be considered reliable, the metric should produce consistent results over time. In addition, the metric should be valid, meaning that it actually measures the intended aspect of performance. If the metric is not valid, it will not provide valuable insights and may even be misleading. This could lead to a misguided effort or even worse, to harmful behaviors.
Choosing the Right Measures
The first step in deciding whether or not a measure is good is to determine what the goal of the project is. Consumers respond positively to quality measures that are easy to understand, such as surveys that report results from people like themselves.
It is also important to choose measures that can be reliably compared. When comparing outcomes across different populations, it is critical that the same measures be used so that the comparisons are valid.
While it may be tempting to alter a validated measure to suit the needs of a particular population, doing so can jeopardize the validity of the measurement. For example, changing the wording of a survey to make it more appropriate for teenagers could introduce bias and make it difficult to detect changes over time.
It is also important to consider how the measures will be collected and reported. The collection, analysis, and use of data is a resource-intensive process for both state staff and health plans and providers. Choosing the right measures helps to minimize the burden on these resources while still generating valuable information.