Top performers use aligned measures and incentives to keep people pointed toward growth. Typically, the most effective organizations avoid overloading on metrics, taking care instead to measure what matters. A few dozen key metrics will often serve to measure most of the economic value of the business, allowing management to focus clearly on company and individual performance.
Well-run companies typically translate company goals and metrics into performance objectives for individual managers and employees. Then they hold these managers and employees accountable for delivering on their objectives. Firms must take action to ensure that objectives and incentives truly support effective decisions within the organization. Two ways to do this are to tie objectives and incentives to sources of value and link a significant portion of objectives and incentives to shared goals.