Manage what you measure

Ian Ash 195271_06

In England it is not unusual to see a board with what looks like a thermometer painted on it placed in the grounds of a church and facing out to the public. The top of the ’thermometer’ will show how much is required to restore some part of the church (usually the steeple) and provides a visual representation of how much has been contributed to date. As progress is made towards the target so contributions typically go up as people like to feel they have contributed to the final result.

Turns out, it is much the same in business and the simple act of publishing a target and regularly showing progress against this does much to galvanise action around achieving the ultimate goal.

However many businesses don’t tend to do this and hence miss a golden opportunity to not only provide real evidence of achievement, but also to build teamwork and alignment amongst the staff.

In last month’s column, I discussed the importance of setting well-defined goals and how properly defining these would give rise to a number of business benefits. Whilst setting SMART goals is important, there is little value in doing this if you are not going to track progress against them. This is generally not hard to do and there is simply no substitute for providing a graphical representation of progress against whatever target you want to hit – no one needs to read loads of text since charts provide immediate visibility of what’s happening.

I find this approach especially valuable for tracking financial performance. In reviewing financials with a client over the past six months, we noticed that the actual sales were trending away from budget in February/March. Armed with this ‘early warning signal’, the CEO took decisive action to get things back on track and, sure enough, ended up exceeding his annual sales target. This approach has proven especially valuable with a lot of manufacturing clients since they have adopted the same mechanisms for tracking quality, delivery in full and on-time (DIFOT), absenteeism and defect levels and it will come as no surprise that “what gets measured, gets managed” (a phrase typically attributed to management consultant Peter Drucker).

As indicated above, not only do such charts provide a useful early warning system on trends, they also do much to align team members around achieving the objective and hence can also be a useful source of team-building as well. Moreover, whenever such charts are published, it sends a clear signal to everyone in the business that the stuff being measured and reported on is important and since people like to be part of a winning team, with the appropriate level of context and communication, there is a shared sense of attainment when the publicised target is achieved. However, don’t be afraid to publish results even if things are going in the wrong direction, doing so will demonstrate that the results are being monitored, are important and will provide an excellent background to any subsequent management decisions to address the decline.

Have a think about what targets are important to achieve in your business and try plotting progress against the these. I would love to hear back on the results you obtain.

Ian Ash, Managing Director OrgMent Business Solutions – www.ombs.com.au

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