What gets Measured, Gets Managed

The Management Accountant’s mantra is, “What gets Measured, Gets Managed.”  It’s amazing how well it works.  As soon as you start to measure something in your business, it usually improves without you doing anything else.

As a case in point, one of my manufacturing facilities at a company I was working at was experiencing 10% daily absenteeism.  This was not acceptable, especially since I knew that much of the absenteeism was due to laziness.  So what did I do?  I had them take daily attendance. 

Did it work?  You bet it did.  In just one week, absenteeism was nearly cut in half just by taking attendance.

I could give you lots of other examples where measuring something improved it immediately.  For instance, some of my crews were taking too long to build their widget and losing money for the company.   I started sharing their production times with them.  They immediately improved their performance and I got lots of recognition from a trade association for finding an innovative way to improve performance (I didn’t think it was that innovative, although I did accept the kudos).

Does measurement always lead to such easy results?

Nope.  Sometimes you have to measure it, and then focus some management effort to improve what you’re measuring.  But this is good.  If you don’t measure things, sometimes poor performance goes unnoticed; but as soon as you start measuring, you focus your management skills on improving whatever it is that you’re measuring.

So how do you put this tool to work in your own business?

Figure out what needs to be improved in your business and then figure out how to measure it on a consistent basis.  By doing this, you will focus your attention on what can be improved in your business.

Happy Thanksgiving,

John

Some Examples of things that can be measured

Sales

Sales Calls

Cold Calls

Referrals Received

Proposals Submitted

Closed Business

Closing Percentage

Production

Hours/Product

Attendance

Rework

Warranty Work

Number of Pieces Produced

Professional Services

New Clients

Marketing Activity

Clients Lost

Clients Gained

Billable Hours