Metrics Should Be Everywhere Part 2

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Information about Metrics Should Be Everywhere Part 2
Business & Mgmt

Published on November 21, 2008

Author: tomstocker

Source: slideshare.net

Description

If your metrics don't align your organizations performance with your tops-down strategies, you have a problem.. You rre measuring the wrong things.

Metrics Should be Everywhere (Part 2) by R. Thomas Stocker In last month’s article I started a discussion There are several key components to this about metrics and discussed how they can be strategy. used for competitive advantage at the First, you have to have a business strategy. employee level in terms and measures they It should be in the form of a strategic plan understand. In this article I want to discuss and referenced, reviewed and updated on a how those bottom-up metrics align with continuous basis. World-class companies your top-down strategies. The top-down use the strategic plan as a living document, strategies are the main driver for business updating it as needed, at least quarterly. focus. They are the critical roadmap needed Most companies update it annually and use to drive performance and ensure everyone it as the basis for their annual plan. That within your company is marching to the strategic plan is the basis for the top-down same beat. strategy, while the annual plan is the basis When using metrics, it is important this for the bottom-up metrics. alignment to the top-down strategy occurs The second step in using metrics to because without it, managers, supervisors competitive advantage is to understand the and employees will focus on tasks versus root causes of problems. Many companies business drivers. Let me explain. Tasks are don’t tie root cause analysis to tracking their those activities an individual or manager key performance metrics effectively. By may feel are important to their own area carefully analyzing causal factors and within their sphere of influence. That may prioritizing strategies around solving the be true, but tasks don’t help the organization largest root-cause problems first, you can drive value unless they are aligned with the focus your (usually limited) resources on business strategy. People by nature want to eliminating those problems before focusing succeed, help the business and make their on lesser issues. Many companies try to own jobs easier. Unless they have clear resolve whatever problems they find as they direction about what they can work on to find them and thus may concentrate on drive true business value, they will work on relatively easy problems and symptoms those things that they feel add value to their without ever tackling the big hairy root- own area. That focus may not align to the cause issues that will take time and strategy as resolving a specific task-related resources to fix but will have the largest problem or activity may not be critical to payoff. Prioritization is a key step to helping accomplish the business strategy. effective process improvement. Some people call those things busy-work. Use metrics for effective review and So how do you help resolve this problem? It meeting management. Most companies hold is not always easy. You must set the tone weekly staff, production and various other from the top. You must challenge the meetings meant to keep the company strategic projects of each manager and you information flowing and coordinated. For must set your critical metrics in a fashion many, it is a focus on today’s issue of the that fosters a continuous improvement day, (firefighting coordination). But it mentality across your entire company. 10 Larkspur Road, East Greenwich, RI 02818 401-451-9799 www.boardroomadvisorygroup.com

should also include a discussion of longer- questioning progress, results and trends need term priorities and the progress toward those to be a normal occurrence. Reviewing longer-term goals. metrics at low levels (with that particular level’s employees) reinforces the perception The bottom-up metrics at each level (metrics of how important those employees’ ideas will roll up to each higher level) and and participation are to the organization. resulting meetings need to focus on Stimulating their desire to contribute and performance. Are the top three root-cause succeed will be enhanced. hurdles to goal attainment being worked on? Are there sufficient action plans in place to Sharing your strategic perspective through address the largest issues? As a result of employee meetings on a recurring basis those actions, are the trends moving in the (quarterly?) helps reinforce the focus on desired direction? Is the person assigned to what is important to the organization. that action plan making progress? Is there Sharing the metrics that you use to drive and an agreed time line? If presented and used monitor that performance is an important effectively, weekly staff meetings will be element of organization-wide meetings. much more productive and significantly Keep in mind not all of the metrics you shorter when the meeting focus is on those share should be financial. In fact, most of KPI trends going in the wrong direction and the non-financial metrics may be more why related action plans may not be important than or just as important as the effective or addressed within the agreed normal financial metrics you are used to. schedule. Of course I don’t mean to imply Productivity, customer and quality metrics these weekly meetings do not also focus on all contribute to the financial results of your today’s short -term issues and goals because business. However, you should focus more they do. However, the larger discussion on non-financial metrics the deeper you go around longer-term actions can be into your organization, mainly because those significantly shortened and focused. employees are significantly further away from dollar denominated metrics. In order for a continuous improvement mentality to be effective throughout the At the end of the day, metrics are a powerful organization, the tone from the top must be way to help guide the actions you need in ever present. Unless you and your senior order to accomplish your strategies. When staff follow up (and through) on a used effectively they will help your team continuous basis, using fact-based metrics to focus on what is important to your help guide your organization’s strategies organization’s success; at all levels. probably won’t be effective. Continuously To comment on this or other topics important to private business owners, access my blog at www.boardroomadvisorygroup.com. About the author; Tom is a Principal of Boardroom Advisory Group, LLC, an owner advisory and consulting firm. Tom serves on the Board of Directors for the RI Economic Development Corp’s Small Business Loan Fund Corporation (SBLFC), the finance arm of the RI EDC. He writes a monthly article for the RI EDC’s Every Company Counts initiative. His articles focus on areas that can add significant value for business owners. Contact Tom directly at 401-451-9799 or tstocker@boardroomadvisorygroup.com. Boardroom Advisory Group, LLC is a business advisory and consulting firm specializing in helping business owners resolve day-to-day systemic issues that interfere with cash flow and profitability attainment. The Firm works with both growing and underperforming small to mid-market private companies. The Firm’s team of hands-on senior professionals find and implement solutions to improve top-line and bottom-line growth, increase cash flow, reduce costs, improve process, structure, and use world-class metrics to keep the business on track. The team also has extensive experience working with troubled companies through business restructures and recapitalization. Boardroom Advisory Group’s core focus on developing strategies to drive and measure performance has resulted in a history of sustainable top and bottom line growth, healthy cash flow and increased company value for their clients. For more information about how we can help you build a more valuable business visit our website at www.boardroomadvisorygroup.com.

©2008-09 Boardroom Advisory Group, LLC All Rights Reserved. No part of this document may be reproduced without the express permission of the author. All registered trademarks mentioned in this document are the property of their respective owners. Additional articles written by Mr. Stocker include: Start Forecasting Now! Do You Have Contingency Plans? I’m Out of Compliance. Now What? Have You Thought About Your Future Lately? Are you in a Foxhole? Metrics Should Be Everywhere (Part I) Are You an Octopus? Metrics Should Be Everywhere (Part II) What is Value? It’s All About Growth These articles can be accessed at www.boardroomadvisorygroup.com/pages/pubs.php. You can also request to be added to his email list to receive his latest articles on a monthly basis on the Company website. Contact Tom at tstocker@boardroomadvisorygroup.com.

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