Portfolio Goals and Metrics

Corporate goals and the measures of progress towards achieving those goals should go hand-in-hand.  In other words, senior managers should only be concerned with specific metrics – those that measure progress towards specific goals.  They should also be certain that corporate goals have meaningful metrics established towards meeting those goals.

You Don’t Get What you Don’t Measure – Goals without Metrics.  Goals are most important when they are articulated by the most senior manager.  But they may never be met if they aren’t associated with metrics that allow for measuring progress towards such goals.   The “trickle-down” method of goal setting is quite common and quite often fruitless.

You Get What You Measure – Goals with Metrics and Incentives.  Goals are most impactful when they are associated with meaningful metrics.  Then you may get what you ask for.  Any metric must have a consequence to its measure – achieving the metric must engender a change in the organization.  The group that achieves the metric should be rewarded in some manner otherwise they won’t strive to achieve the metric.  But senior managers should be careful about what they ask for, because once the organization is incentivized to achieve the metric it will continue to improve on the metric.

Is it a Line Metric or a Project & Portfolio Metric?  It is important to determine whether the metric be placed on a particular line or at the portfolio level.  It is tempting to assume that important corporate objectives are portfolio objectives, but that may not always be the case.  If the work to achieve the goal falls within a single line or a couple of lines, then the metrics should be established with the relevant lines.  If the work to achieve the goal falls to a set of projects, then the metrics should be established within project and portfolio management.

The Problem with Incentives.  Once the goal behind the metric is achieved, the metric should be removed from corporate scrutiny, otherwise the organization will get more than it asked for.  Precious corporate resource and funds may be wasted on excess achievement.  Senior managers must remove the incentives once the goal has been reached.  But they must avoid the problem of dis-incentivation.  If the removal of incentives is articulated in a negative manner, the organization may respond negatively and performance may revert to pre-incentive levels – all the effort to achieve the goal may be undone.

Avoid Meaningless Metrics.  If you can’t articulate a meaningful goal then the metric is not necessary.  A danger to portfolio managers is to report on metrics that have no value to senior managers.  Portfolio managers should periodically ask senior managers which metrics are not important and stop reporting on such metrics.

Measure More than Metrics.  Once senior managers come to trust the ability of portfolio managers to provide portfolio information, they will ask for considerably more information than the agreed upon portfolio metrics.  The savvy portfolio manager will anticipate such requests and ensure that the portfolio data management system gathers the requisite information prior to the request.

All portfolio data should be gathered in an unobtrusive manner – gathered in a manner that does not inconvenience those who provide the data.  It needs to be data that is provided already for some other purpose, i.e. data that line managers need in order to oversee their own operations.  Such proactive information gathering avoids “analysis by paralysis”, where individuals must stop what they are doing to provide the data.  The paralysis may be unavoidable if it involved first-ever data gathering.  But routine paralysis will quickly raise organizational alarms that could bring negative consequences to those who need the data.