Most organizations and leaders talk a good game, but the facts are the facts. As I visit any number of organizations I continue to observe some common threads. Here are statistics that confirm those observations:
- 90% of strategies are not executed
- 75% of improvement initiatives fail
- 85% of leaders spend less than one hour per month discussing strategy
- 95% of employees do not know the organizations strategy
- 92% of organizations do not measure performance
Measurement seems to be overlooked by many leaders in small to medium sized organizations. Often leaders have built a strong trust in their hand-picked teams and were once able to get a quick performance snapshot by walking around. Now your business has grown beyond your ability to manage at a glance using the same old methods. Measurement is a critical tool that leaders must employ regardless of how well they feel they are connected to key people, groups, and customers.
Here are 8 reasons why your organization needs to measure results across all business areas:
- Measures clarify expectations. Measures tell employees what is important and help to set expectations.
- Measures direct behavior. Establishing measures, defining what is acceptable and what isn’t will help employees focus behaviors in the right area.
- Measures make performance visible. If you aren’t measuring it, how can you manage it? By measuring it you can compare performance to other high-performing organizations or people. This will allow your teams to report on where they stand, what is working, and what might need to improve.
- Measures can focus attention. By measuring the most critical elements of a function or area, you are in effect telling your employees where to focus their attention. By not measuring anything, you are leaving priorities to chance.
- Measures promote consistency. Whether it comes to production, quality, or cost; consistency is needed to provide quality, timeliness, and stable pricing to your customers.
- Measures provide feedback. Relevant measures help to keep people and teams on track in meeting goals and deadlines.
- Measures improve objectivity. Measuring performance and managing people using the facts is the only way to fairly provide performance feedback, rewards, and promotions.
- Measures improve decision making. Measuring your performance and comparing it to competitors helps you make better decisions and improve your business results.
So what should you do?
- First: And most important, clarify your strategy to all employees. Make sure that they completely understand what your key objectives are. Write it out. Spell it out. Repeat it and clarify it at every opportunity. Don’t let your team keep blindly working towards what they individually think is important.
- Second: Put measures and milestones in place for all of your initiatives. This will help keep people focused and timely in executing your initiatives. It will help you lessen the chance of missing critical deadlines or even failure.
- Third: Establish measures that will help you and your team define what a successful outcome looks like. You can always refine and improve these measures as you learn more, but start with something that appears reasonable or ensures that your operation is profitable.
Measures bring about clarity and will help you build a more consistent performing organization. They will help you know how your business is performing. They will help you more fairly recognize and reward those that go above and beyond.
So what is holding you back from measuring the critical metrics of your business? If you need help, just ask us at Visible Progress. We would love to help you establish a solid measurement program. Your profits and your employees will thank you for it.