Are You Measuring Your Business in the Most Effective Way?

Businesses collect enormous amounts of data daily. Data files, measurement systems, and other information gets repeatedly dumped into tables and formulated in charts, regardless of whether anyone is looking at the data. In many cases, reports are run and distributed, but not fully utilized. Collecting data, running reports, and analyzing data should lead to answering critical questions and understanding metrics such as weekly production margins. Conducting a targeted event to simplify your business measurement system can help you sift through the noise and identify and measure the data that matters most. This meaningful activity will refocus your team and maximize your results.Measure what gets managedTypically, team members represent two extremes as it pertains to business measurement systems. The first group is passionate about running the business by feel. They make management decisions based on keen observation and “tribal knowledge.” This method has generally served them well, and in many cases, the business has delivered. The other camp is comprised of technical and operations staff immersed in piles of data. Associates in operations meetings are buried with thick stacks of reports. They spend time sifting through comprehensive reports that are generated each day to glean the one or two nuggets that drive much of their daily activity. Many times, the data collected is good and helps solve a legitimate business problem; however, is it the correct problem? While you can certainly become debilitated by information overload, pure gut decision-making exposes you to potential biases and over-confidence. Successful leaders continuously fine-tune their decision-making approach by drawing on critical data, as well as other subjective information that is gained through experience.Are you measuring what’s important to your customers?Landing at the crossroads of customer wants and needs and internal stakeholder requirements is critical to the success of any business. Distilling complicated data sets into concise information that can facilitate business decisions can be a challenge for those overwhelmed by trying to get product out the door or serve the customer that is standing right in front of them. Conducting focused efforts to simplify your business and identify what’s truly important can help your business achieve extraordinary results, and help team members become more productive, meaningful contributors to company objectives.Do your associates understand what activities drive profit?One simple method to test your business’s KPIs is centered on asking questions. If we improve this KPI, will we make more money? If we improve this KPI, will our customers be happier? Will we achieve more sales? Improve our quality? Become more relevant in the marketplace? Achieve some competitive advantage? In many situations, team members work under the assumption that they can influence only a small number of KPIs. For example, quality associates are only responsible for scrap or customer complaints. In other situations, the sales teams are laser focused on increasing the top line. Exemplary firms create environments where teams collaborate to maximize performance on all mission critical KPIs. Being transparent and candid can help with the process of cultural transformation. Creating shared outcomes leverages the power of many versus the intellect of few.As your firm embarks on the journey of refactoring KPIs, it’s absolutely critical to be able to present the information in a simple and digestible format that can be interpreted by associates at all levels. Team members must be able to understand if they are winning or losing and how to adapt behaviors to maximize results.It’s a marathon and not a sprintThe initial steps for refactoring your business and rationalizing your KPIs may only involve a couple of key metrics in the first year. This simplification will allow you to hone your focus and validate that process changes you have implemented are indeed impacting the results you intended.

We Can Help

Focusing on the most important KPIs to maximize business results can be complicated. Elliott Davis is here to help. Our Management Consulting practice is poised to help your team think about your business differently and transform your team’s actions to those that will maximize profits and minimize costs. Contact us for an exploratory discussion to define your needs and mobilize action.The information provided in this communication is of a general nature and should not be considered professional advice. You should not act upon the information provided without obtaining specific professional advice. The information above is subject to change as a result of evolving legislative developments and government guidance.