“If you can’t measure it – you can’t manage it”. The adage has been handed down through several generations of managers but it still contains a fundamental truth. The issue has been brought into sharp focus within our business, Guaranteed Business Improvements, because as a consulting and training organisation, the company ethos is to guarantee the results of work undertaken for client companies. In many situations, however, available financial measures are not appropriate because they are too remote to accurately record the development of the changes taking place.
The objective is to impact the financial measures to target and monitor the change.
Such measures are not always easy to define. At one level, the monitoring of manufacturing production is generally straightforward but, taking a broader view of the supply chain often quickly goes beyond the limits of measured activity. In more than one company, even in the measurement of production the pound sign can still creep in and confuse the operational focus. A multi-product plant targeted and monitored on the value of output can easily stray into short-term changes in product mix to recover problems of non performance. The resultant casualties can be customer service, out of balance stock and unplanned change and stress on the supply chain.
At another process level, however, even identifying a suitable measure can require study. A recent project, for example, targeted the overall upgrading of a client company’s ability to turn enquiries into satisfactorily completed orders both in a shorter and more reliable turn-round time and with a higher conversion of enquiry to order. The majority of the process was conducted within “the office” territory hitherto blameless of any measurement. In the event, analysis of the process enabled “check points” to be created which flagged what the client company needed to know from the customer at that point, what was flexible and what had to be a firm understanding with the customer – for example, specifications of the job, detail of delivery requirements, packaging details – so that there would be no last minute surprises which would cause the job to be delayed or revised. These check points, with some conventional end process measures, enabled the desired improvements to be achieved with the ultimate reward visible at the bottom line.
Commonly, Total Quality programmes and the so called “softer issues” also pose the question of appropriate targeting and measurement. To take such programmes beyond the achievement of a transient warm glow requires careful structuring and targeting of success measures through which to drive the programme and obtain genuine impact on the business. An increasing awareness of the value of the application of the Business Excellence Model also adds pressure for the need of more subtle measurement. The results segments of the Model are measurable and increasingly measures are in place: but the model is driven by the Enablers. So how do we measure leadership and policy and strategy? Remember, if you can’t measure it …
At the bottom of establishing some of the less obvious measures is the need to understand what activity is in focus and, more importantly, what it is that we are trying to change. Once the nature of change is defined, the identification of the measure starts to become possible. Perhaps an addition to the adage is that “if you can change it – you can measure it”. For example, on one recent project, we wanted to measure progress on leadership. The client identified a number of actions which would improve leadership qualities within the firm: one involved increasing the visibility and accessibility of managers to staff in the factory.
To this end, we organised a tracking system, through the managing director’s secretary, whereby senior directors had to log an hour a week of “quality contact time” on the shopfloor, making themselves available for staff to talk about problems and concerns. The log enhanced the growth of leadership and engendered trust among the workforce.
Within GBI we have built a portfolio of non-financial measures and we still add to it on a regular basis. The application of these measures makes it possible for us to target and commit to bringing about change in our client companies. In addition, introducing the measures plays an important role in enabling the client to sustain and build upon the changes which have been introduced.
In the end, measurement of the business is financial and ultimately reflects in profit. But to achieve the result at the bottom line, the key is the measures that drive that ultimate measure.
Ron Aspinall is a director of Guaranteed Business Improvements, a business consultancy and training specialist
Big Four firm Deloitte has announced its investment in blockchain start-up SETL as well as a partnership with VTC Group
Clients and business advisers can now connect to small businesses through a Facebook Messenger chatbot service, provided by Xero
It has been another glittering night in the accountancy calendar. A range of practices big and small, plus outstanding individuals, have been rewarded for their efforts in the British Accountancy Awards 2016
Making Tax Digital responses to the consultations expected in January 2017