Measures of Success
You have communicated the growth plan, secured adequate financing and sharpened the management of your company. Sales are on the rise. It's time to evaluate results, not to label your efforts as success or failure but to guide you as growth continues and business environments change.
Growth is partly about building sales but also getting more out of what you have. In other words, building efficiency. Performance measurement gives your efficiency-building efforts a focus.
The first step is to benchmark against past performance and the performance of other companies.
- Identify key processes affecting performance.
- Compare with other companies or industry databases.
- Conduct gap analysis to find opportunities for improvement.
- Focus on high-priority processes.
To measure, you need something to measure against. Benchmarking compares your company statistics against the performance of similar and better-performing companies.
Benchmarking not only tells you how well you're doing over time, it also helps avoid "reinventing the wheel" by quickly zoning in on areas of difficulty and then learning from other organizations how to do better. It's a quick and continuous way to research improvement.
Types of Benchmarks:
- Process: Measures work processes such as tool-and-die changes, order processing or customer response times.
- Performance: Measures outcomes of processes such as cycle time, percentage of repeat orders or positive resolution of complaint percentage.
- Strategic: Measures critical success factors such as customer satisfaction, market share, return on assets or gross margin percent.
- Identify key processes affecting performance - those that use a lot of people, cash or materials (warehouse order picking), generate high value (customer service), impact on risk (receivables collection) or highly visible to customers (call response time).
- Measure each part of process.
- Compare with best in industry.
If you cannot find or prefer not to ask other non-competitive organizations for comparative data, commercially available databases contain plenty of information - especially for processes such as credit management that reoccur in many types of organizations. Check major consulting companies or those that specialize in your industry.
Finding the major variations between your data and data from other companies reveals the best opportunities for improvement. Focus on those with greatest impact on performance.
- Misplaced priorities: You can't measure everything - it's wasteful and irritates employees. Measure what's important to customers and things that have an impact on quality and service. It should not be a Big Brother operation.
- Busy with numbers: For some organizations, measurement becomes the job. Don't forget to act on what you find out. Get everyone to realize the numbers are just the indicators to tell you where to look and what to do.
- Shallow measures, vague response: Measure customer satisfaction, but also find out what drives satisfaction and measure that. Quantify and be specific. If your surveys show delivery times are too long, measure them and target a reduction of 30 minutes by end of quarter.
- Forgotten soldiers: Don't forget to measure employee satisfaction. Find out what they want, work on it and measure again. Grumpy employees usually make customers equally unhappy.