Success measurement means to measure what you manage
How do you accurately measure your business’s success and keep track of progress towards achieving your aspirations? Examine your vision, mission, objectives and strategies to determine which outcomes your business believes are essential. What activities will be your critical success measurement?
If you regularly monitor, measure and evaluate critical aspects of your business, and leverage the metrics, it puts you in a much stronger position to control outcomes in a more timely fashion.
The metrics you should be looking at are the ones which lead to growth and sustainability and are most likely to have the most significant positive impact. Short-term success measurements are essential, but long-term measurements are the most crucial.
Your success measurements should be tracking improvements in business efficiency, customer service, profits and cash flow. These metrics will assist in your problem-solving and decision-making. Success measurements aid continuous improvement and help focus your stakeholders and resources on your priorities.
Focus success measurement on what is working well
Fixing problems is one thing but measuring critical aspects of performance will have a far more significant impact. Which marketing initiatives and strategies are working best? Know which ones are failing so they can either be adjusted or replaced quickly. Not down the track when your financial reports or some external force indicate there is a problem.
To determine which success measurements are useful, you should ask two fundamental questions.
- What are the objectives of each success measurement?
- What factors will help you achieve each objective?
Your measurements should be able to be quantified regarding quantity, quality, time, or cost. Start with four or five success measurement metrics and only add new ones as you become comfortable with each one’s relevance.
Be careful not to overwhelm your business with too much new information, irrespective of its importance. A gradual improvement is far better than enthusiastic overkill. Your critical success measurements might include some of the following:
- Financial viability. Sales, profitability and cash flow
- Customer satisfaction. Customer service and the customer experience
- Employee satisfaction. Morale, performance, turnover
- Workplace health and safety. Healthy employees equal a healthy business
- Operational outcomes. Key production bottlenecks and logistics.
Business owners and managers are frequently over-confident in their judgements. Their information and knowledge are often at odds with reality. Most people, for example, regard themselves as better-than-average drivers, but the outstanding drivers rely on their metrics and dashboards.
Businesses who link non-financial success measurements and value creation stand a better chance of improving outcomes.
Building a simple success measurement dashboard
Once you have chosen your first four or five metrics, bring them together in one place. A simple dashboard, whether it is a spreadsheet or a reporting tool, lets you see the health of the business at a glance rather than digging through separate reports.
For each metric, record a starting point, a target and a review date. Without a baseline you cannot tell whether things are improving, and without a target it is hard to know what good looks like. Keep the layout clean so anyone in the team can read it in a couple of minutes.
Assign an owner to every measurement. When one person is responsible for tracking and reporting a number, it is far more likely to be kept up to date and acted on.
Turning numbers into action
Success measurement only adds value when it changes what you do. Set aside time each month to review the dashboard with your key people and ask three questions:
- What has improved and why?
- What has slipped and what is causing it?
- What will we do differently before the next review?
Capture the agreed actions and check on them at the following meeting. This rhythm keeps everyone accountable and stops the numbers from becoming just another report that is filed and forgotten.
Remember that digital channels offer a wealth of useful data. Website enquiries, search rankings, email engagement and online reviews all give early signals about customer interest and satisfaction, often well before the change shows up in sales figures.
Finally, review the metrics themselves every six to twelve months. As your business grows, some measurements will become less relevant and new priorities will emerge. Retire the numbers that no longer guide decisions and replace them with ones that support where you are heading next.
