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Saturday, February 6, 2010

Metrics - Leadership Accountability

"If you don't measure something, you can't change it. The process of leadership is one of painting a vision, then saying how you're going to get there, and then measuring whether you're actually getting there. Otherwise, you risk only talking about great things but not accomplishing them." ~ Mitt Romney
In the intense competitive environment keeping a pulse on the business is essential to moving forward.  The following are key metrics:

  • Cash Flow - Cash is King!  Investment bankers place high value on cash flow.
  • Inventory Turns - Product/Supplies not moving - steals opportunity!
  • Receivable growth vs. Sales growth - Keep receivables proportional with sales or lower.  Cash in your pocket is better than extending the "easy payment plan."
  • Productivity - work smarter - not harder
  • On-time deliveries - keep all customer commitments
  • Employee Retention - Good employees stay with good companies
  • Backlog - keep an eye on the waterfall of sales
  • Interest Rate Coverage - Key metric of banks - must manage
  • Gross Margin by Product Line - Market high performers, adjust lower margin products, and dump losers!
Businesses moving to the next level of sales and profitability have the key metrics aligned throughout the organization.  Every employee walks in step past the competition!

"The competitor to be feared is one who never bothers about you at all, but goes on making his own business better all the time." - Henry Ford