If you measure something on a regular basis, if not daily, after a while you will become good at what you are measuring, if not for the simple fact that you are paying attention to it. There are two main issues to measuring the company to success.
1. Measuring the right thing(s)
2. The measuring processes needs to be easy and accurate
Measuring the right thing(s)
There are many things you can measure like: sales this period to last, sales growth, customer satisfaction, profit, profit increase, employee satisfaction, bank balance trend, A/R trend, process efficiency, job costing, job costing vs amount charged...The list is almost endless. What you choose to measure should be your company's competitive advantage, what is it that your company does differently that makes customers want to buy your product or service.
What if you only measured one thing like sales growth. Seems like a reasonable thing to measure. If I were in the sales department at your company I would do ever thing I could to make the sale and make this month's sales greater that last month's. Before you try to hire me for your sales team have a look at some of the things I would be motivated to do to increase sales growth: Sell bellow cost, sell what we don't have, sell at the end of the month when I know customer will do a return in the next month, as soon as I make the sale I will leave customer high and dry as I move on to the next sale... In this example since I am only being measured by sales growth I am motivated to forget all the other long term goals that will keep the company in business. If we measured at the same time sales growth, profit growth, and customer satisfaction not only would I be getting sales for your company I would be motivated to make sales that are in the best interest of the company.
This is a balanced approach to performance measurements. Make sure that what you are asking for is what you really want.
The measuring processes needs to be easy and accurate
So lets say you have figured out what to measure. You can't spend more time and money to calculate the measurement then the measurement is worth. You also need the measurement in near real time. If you find out this year how you did last year it is too late to make business decisions as everything has changed. More importantly, if your measurements are miscalculated you will make decisions based on bad information. The answer is that you should have a management system that measures things in real time and displays the measurements in a dashboard so at any point in time you pull up the dashboard (like a cars dashboard) and you see how you are doing. This allows you to make business decisions in real time. Remember the early bird gets the worm and in today's marketplace making decisions in real time could make the difference of being profitable or going bankrupt.
Location: SinglePost
Subscribe