What Not to Measure…
Some CFOs believe it’s their fiscal duty to keep track of every production, marketing and administrative metric as a way of quantifying their organization’s performance.
This kind of metric-measuring mania not only is counterproductive, it can result in such a plethora of data that it’s easy to overlook the really important things to track—those that truly display the organization’s productivity.
But since you can measure a wide range of metrics—especially today when so much of a company is interconnected with computers—how do you choose which to look at? Use these guidelines:
Measure only those areas where
The results of the metrics trigger the need for a management decision.
The decision is not obvious and is of consequence.
The results can have significant repercussions for customers, suppliers and financial performance.
…And What Metrics to Share
Once you’ve decided which metrics to gather, how much of this information should you share with others on the staff? After all, many employees will feel much more involved—and more productive—if they can see the fruits of their labor. However, you don’t want to inundate managers and key employees with reams of reports.
To determine who needs such numbers and which ones they should see, generate a survey asking each key person what results they would like to review—and why.
After they receive their reports for a few months, test whether they are really using them. Try abruptly cutting them off without an announcement: If employees don’t complain, it’s a sure sign nobody noticed, indicating they probably don’t need—and probably didn’t even read—the reports.
Give Orders Correctly
How many times have you heard an employee grumble that an assignment makes no sense?
Or, even worse, have you ever had the experience of telling a subordinate to do something only to discover afterward—either because the employee misunderstood or you made a mistake in giving instructions—that the completed job was a waste of time?
There’s a way to avoid both problems: Don’t just issue the order; instead, give a detailed rationale for why the work needs to be done. The goal is to discourage thoughtless compliance, unexpressed reservations about doing the job or resentful disobedience. If you sense resistance to completing the assignment, invite feedback and address the employee’s concerns; there’s a good chance there’s a valid reason.
Bonus: Not only can you uncover errors in your judgment about the task, you may discover better ways of accomplishing it.
Dumping Obsolete Products
At least once a year the accounting department should stick its nose into the marketing department and check to see whether the company has products that just continue to collect cobwebs in the warehouse.
And why would the company continue to offer such products? There are many reasons, including
Someone in management is considered the “sponsor” of the product and would take offense if the organization dropped it.
Marketing employees fear dropping the product would insult a customer and throw business to a competitor.
It’s considered a staple the business has always offered for sale.
It usually takes an outsider, like a numbers-oriented accountant, to suggest deep-sixing such an obsolete product.
|An Invitation |
The JofA publishes a monthly collection of Golden Business Ideas and invites readers to contribute their favorites (for attribution, if you like).
Send your ideas to Senior Editor Stanley Zarowin via either e-mail ( email@example.com ) or regular mail at the Journal of Accountancy , Harborside Financial Center, 201 Plaza Three, Jersey City, NJ 07311-3881.