Measure to Manage Part II

In last month’s post "Measure to Manage", we discussed the importance of measurement to ensure your people are aligned around your business vision and values. It may be necessary to reprogram their brains to provide focus.

New programming will only happen if:

  1. Management’s behavior is consistent with the stated vision and values.

  2. The processes are consistent with the vision and values.

  3. What is being measured and recognized is consistent with the vision and values.

When these are consistent, you have created “Alignment.” A misalignment of any one of these three will prevent the collective organizational brain from being reprogrammed and will create possible cynicism. Cynicism comes from being lied to, too many times. A cynical workforce is one that is not only unproductive, but one in a state of slow organizational death.

Conversely, an organization in alignment is one that promotes peak performance and organizational health.

Therefore, what is being measured must also be in alignment. If your vision and values are to be realized and your organization is to survive, customers (both internal and external) must either be satisfied (meeting their expectations), or delighted (exceeding their expectations). How and what can you measure that will indicate how well you are doing in the eyes of your customers?

Indicators of customer satisfaction, if properly established, will provide insight as to your future strength. Strong customer satisfaction provides a base upon which to build your future and from which it will be possible for profits to flow. The reverse is not necessarily true. Strong profits do not necessarily build a strong customer base. Therefore, a measurement of profitability will show where you are now, based upon past decisions, or how well you have recently been able to juggle costs and inventories; however, as a measurement it has little to do with measuring customer (future) strength.

If profits can be viewed as the result of sound business decisions and a smoothly operating organization, there need to be interim indicators that will signal when something is not running smoothly indicating the need for mid-course corrections, or that something is breaking down and needs attention before the report card, profit, is reported. The concept is much like the checklist that a pilot goes through before he/she flies an airplane. There are seven main checks that a pilot looks at before taking off. If these main indicators are all “go,” it is safe to fly. The main indicators are reflective of the many sub-systems that make up the electronics and mechanics of the plane. If a sub-system were not functioning, it would not allow one of the main indicators to function properly and thereby not allow the pilot to take off in an unsafe aircraft.

The same analogy holds true for business. It is important for executive management to have a few key indicators that they constantly monitor which will show that the many sub-systems are working in such a manner so as to produce the desired financial gains at the end of the game.

In next month’s post, we’ll offer some examples of key indicators and provide you with a process to create your own.

 

Latest Blog Posts