While monthly financial statements are essential to effectively managing your business, they are historical documents. They tell you what’s already happened when it’s too late to do anything about it. So in addition to monthly financial statements, you also need measurements that are predictive in nature to serve as early warning signs that something may be heading south on you . . . early enough to allow you to take corrective action and get back on track. For more on effectively using data to manage and control your business, please read below.
“Everyone has a number.”
I have referenced Gino Wickman and his book, “Traction: Get a Grip on Your Business” several times in the past (once as recently as my August 6 posting), and will refer to him again in this posting. Actually, instead of my doling out his advice in little bits, one at a time, you really should pick up a copy of “Traction” and read it . . . you’ll find lots of common sense, practical stuff to help you run your business. Anyway, in one section of the book, he talks about using data . . . some people might refer to a “dashboard” or “Key Performance Indicators” or “metrics” . . . to manage and control your business on a daily/weekly basis. The old management axiom says, “What gets measured, gets done,” and while we’ve talked about that here before, we’ve talked about it in terms of companywide goals and measurements. But Wickman directs us to make it personal . . . give everyone a measurable goal. Not just the salespeople or the production people, but the Receptionist, the IT guy, and the guy on the loading dock as well. Everyone.
Consider the benefits of giving everyone a personal, measurable goal:
• It can add specificity to sometimes general job descriptions. If my goal is to produce 5 widgets an hour, it’s pretty hard for me to misinterpret that. There’s nothing ambiguous about the number 5. If I’m producing 5 widgets an hour, I’m on target. If I’m producing 6, I’m in line for the “Employee of the Month” award. If I’m producing 4, I’d better pick up my game.
• A specific, measurable goal adds heft, importance to the job. The very fact that someone has taken the trouble to measure what I do tells me that what I do has significance and plays a role in the company’s success.
• Goals foster teamwork and inclusiveness. If individual goals are a part of our culture, and I have my goal, I must be a part of the family. And if we all have individual goals to achieve, I’ll do what I can to help others achieve their goals and trust that they will do the same for me.
• A well-crafted goal can bring out both competitiveness and creativity in a person. The boss wants me to produce 5 widgets an hour? Ha! On my worst day I can do 6! And I think with a few tweeks to the process here and there, I can probably get to 8.
Of course, we don’t need a unique goal for everyone in the organization. If we have three people doing identical tasks, their goals should all be the same. But that’s OK. The important thing is that everyone has a number. The fact that others have the same number for doing the same work doesn’t really matter. In truth, it’s only fair.
For sales people, it’s relatively easy since most are accustomed to working with quotas. Likewise with production people (or service delivery people) who usually have all sorts of measurements on their efficiency and effectiveness. But what about a clerk in the Accounting Department, or a secretary in the Sales Department, or the Receptionist? Those jobs tend to be more qualitative in nature than quantitative, yet even so, with a little creative thought, you can find relevant, measurable goals for them as well. For instance, a goal for the Receptionist might be that every telephone call is answered by the third ring, or that no caller is left on “hold” for more than 60 seconds, or that no visitor is stuck in the lobby for longer than 5 minutes.
So be expansive! Don’t let the sales guys have all the fun. At your company, let everyone get a little piece of the action. At your company, everyone has a number.