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How to Get Started Tracking Your Business Metrics

Jul 28, 2015 by Bill Collier 0 Comments

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Though he’s referring to baseball, Jim Evans’ stance on tracking metrics can be applied to professional organizations just as they are to professional baseball organizations.

Metric tracking is a fundamental process for companies that practice the Great Game of Business. And although it’s an essential part of playing The Game, it isn’t uncommon for companies to find themselves at a loss for whether or not they’re tracking the right numbers. Sometimes company leaders don’t even know where to start tracking!

Tracking Metrics — The Quick and Dirty

If you’re just starting to implement the principles of The Game (such as transparency, communication and business literacy education), you might be wondering how to start tracking business metrics.

Coming up with the critical numbers can be difficult, but in reality, it’s simply this: start with a pool of numbers that seem as though they could be important to your overall success, then rule them out one by one until the pool is small enough to count on one hand. Those are your critical numbers.

Here are some tips and provoking questions to help you generate a pool of possible “right numbers”:

  • Start with your corporate-level financial goals and targets such as the specific numbers that define success for your company.
  • Look at the things going on in your market and industry. What are your company’s trends for the last few years? What are your customers and employees saying?
  • Visit your financial statements. Often times, the “right numbers” will include sales, gross profit and net profit from the income statement. Balance sheet numbers might include cash, accounts receivable, debt and equity. You may also calculate various ratios such as gross margin percent.
  • Identify all the vital areas of focus — customer service, marketing, sales, products and services, production and quality — then drill deeper into each. These may be your various departments or they may be workflow functions independent of the department.
  • Don’t focus only on financial measures. Operational numbers (i.e., Web hits, turnaround time, customer satisfaction, etc.) can be especially helpful in analyzing the progress toward your most important goals.
  • Ask yourself these two questions: what numbers do you and your people currently monitor on a regular basis? How did you choose those numbers?

Now that you have a BUNCH of numbers, it’s time to play the elimination game, as here is my final piece of advice for determining the metrics you’re going to track:

  • Keep the amount of information to a handful of critical numbers so your attention isn’t diluted. Just because you CAN measure something doesn’t mean you SHOULD. Less is more.

Once you’ve narrowed down your critical metrics, you need to ask yourself one more question: are you comfortable that you’re monitoring the right numbers?

You don’t have to say yes right away. Sometimes you’re not going to know your essential and critical numbers right away, and other times you’re spot on.

Either way, though, you’ll need to implement a system to organize your numbers.

For this, I recommend starting a dashboard.

Organizing Your Numbers With a Metrics Dashboard

Most companies do not have an all-in-one dashboard that will automatically upload and present information from various sources. For most of us, it will be a manual operation — i.e., grab some numbers from your accounting software, take some from your customer database and so on.

Your dashboard will be your accountability tool. It’s going to help keep your entire workforce on track so it should be clear, easy to read and very accessible. Essentially, it is a “board,” not unlike the dashboard of a car, or the dashboard of your Google Analytics account that contains all the important metrics, past, present and future (goals).

Based on the metrics you are tracking, assign dashboard metrics as needed to ensure that each function is contributing to the higher-level goals (future numbers).

How to Make the Most of Your Dashboard

Having a dashboard is great, but in order to get the most out of it, I have a few tips:

  • Place the dashboard in a very visible, centrally located place that is frequently trafficked by your employees. The visual reminder will be an extra stimulus to help behave in a way that will hit the target numbers.
  • Based on the metrics you are tracking, assign dashboard metrics in advance to ensure that each function is contributing to the higher-level goals (future numbers).
  • Next to each number, put the name of the person who “owns” that result so it is clear to the entire organization.
  • Also, as the Great Game teaches, host a weekly Huddle, same day and time each week to go over the numbers.
  • Go through the numbers in the same order each time, with each number’s owner reporting on month-to-date results. Did you get an unfavorable report? Come prepared to let the others know how you’ll get back on track.
  • Hold each other accountable, beginning with leadership.

If you haven’t been monitoring the right numbers in the past, this approach is almost certain to improve results in a relatively short time.

If you still aren’t convinced that you’re monitoring the right critical numbers now, the weekly huddle results will tell you so — especially if your critical numbers seem to always hit their targets, yet, your profitability does not improve. This is a great indication that you’re not yet focusing on the right ones.

To circle us back to sports statistics and analytics, Lou Holtz, former football coach and ESPN analyst has said before, “In the successful organization, no detail is too small to escape close attention.”

Once again, it applies to sporting games, and it applies for the Great Game.

Bill Collier is the St. Louis area coach for The Great Game of Business. He helps businesses increase accountability and results with open-book management. He is the author of How to Succeed as a Small Business Owner…and Still Have a Life

 

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Topics: Huddles, Open-Book Management, Planning

Bill Collier
Written by Bill Collier

Bill Collier is the author of “How to Succeed as a Small Business Owner … and Still Have a Life”. He helps businesses improve their financial results by teaching employees to think and act like owners.

About The Great Game of Business

Our approach to running a company was developed to help close one of the biggest gaps in business: the gap between managers and employees. We call our open-book approach The Great Game of Business. What lies at the heart of The Game is a very simple proposition: The best, most efficient, most profitable way to operate a business is to give everybody in the company a voice in saying how the company is run and a stake in the outcome. Let us teach you how to develop a culture of ownership, where employees think, act and feel like owners.