Lord William Thomson Kelvin said “If you cannot measure it, you cannot improve it “

Measuring the performance of your outsourced arrangement is extremely important. Not just from financial perspective, there are many other considerations involved here ranging from measuring productivity, contribution of your employees, morale and motivation, project and deliverables at stake, time to market, security amongst others. Transparency is the key, don’t ignore the right team members that need to see the metrics, again different metrics for various levels of audience is fine. Insist on showing action taken where appropriate.

Some best practices to adhere are :

• Invest in looking at all metrics together at a glance – many of these are related and helps to look at the overall health of the outsourcing arrangement.
• Review at different levels, pick a cadence weekly, monthly, quarterly and of course yearly overall.
• Look for amber and red not just greens. Reject the all green report, it means nothing. Look for false claims
• Dashboard with historical data and trends would be of immense help to see the pattern whether you are improving or going south
• Constitute special teams to tackle the toughest metrics needing remedial actions
• Conduct / facilitate reviews at appropriate level – make it in person if feasible. Over the phone conversations don’t tend to go well more so when the metrics are mixed
• Distribute widely among those that are not in attendance or don’t get a seat at the table while metrics are reviewed and solicit feedback
• Don’t have too many levers to measure – measure what is important to you and in that order
• Avoid too many numbers –focus on essentials. Have a crisp summary for the period under review
• Don’t delay looking at reports – for example monthly reports should be reviewed the first week of following month likewise – no point looking at metrics after a long pause, the damage is perhaps done already
• Look for noise that tops the bad metrics, eliminate those metrics that you don’t care but the outsourced providers cares and induces it into the mix
• Encourage showing what is not green – after all that is what needs attention. Discourage the “All green” reports, they mean something is wrong

Don’t lose out on averages…..or statistical lies, imagine the famous sentence attributed to Mark Twain “Lies, damned lies, and statistics” describing the persuasive power of numbers, particularly the use of statistics to bolster weak arguments.