Tale of a Turnaround, Part 3: “What gets Measured Matters”
Profits…Costs…Revenue…Efficiency…Customer Satisfaction. Each business has a set of unique levers that they can maneuver to drive their performance. Determining what Performance Metrics to measure and at what level of detail is critical. Aggregate data with no details generates a high-level fog while tracking volumes of detail can be overwhelming. We focus on identifying the most important Key Performance Indicators (KPIs) to measure in order to drive the 20% of work that will generate 80% of the results.
In our Client’s case, all Revenue was lumped into a single “Sales” category with no visibility to their unique product lines. Once we switched them to the new operating and accounting system, we were able to create a dozen product lines in their General Ledger and track Sales, Profit Margins and Inventory Levels by Product Line as well as by Salesperson and Customer Tiers.
Initially when we asked one of the sales people what their Goal was for the year, they blushed and were speechless. Management had never taken the time to sit down and create clear and concise Goals down to an individual level.
Once we established clear goals with actionable steps and had Key Performance Indicators in place, we could now focus on the Team of Employees.