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How
to Make Performance Measurement FUN! |
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Our mission is to provide information and strategies
to business owners and managers for improvement
in the effectiveness of its business management
so that key objectives can be realized.
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Ted Hofmann
- Principal/Senior Consultant
John Morre - Principal/Senior Consultant
Linda Panichelli - Principal/Senior Tax
Consultant
CFO Plus, LLC
1450 Grant Avenue, Suite 102
Novato, CA 94945-3142 |
Home Office |
: |
415-898-7879 |
Toll
Free |
: |
866-CFO-PLUS
or 866-236-7587 |
Fax |
: |
415-456-9382 |
Email |
: |
thofmann@cfoplus.net
jmorre@cfoplus.net
lpanichelli@cfoplus.net
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Website |
: |
www.cfoplus.net
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Measuring
employee performance can be a tricky business.
While there are many schools of thought regarding
how to conduct the performance review,
most everyone agrees that a review must be conducted
regularly, and that some type of measurement must
be built into the system. If you don’t have the
measurement aspect in place, how do you know what
to assess?
Take
Jane, for example. She has worked for your company
for five years and is considered a loyal, good
employee who always gets her work done on time.
However, upon closer examination, you see that
her performance reviews or employee appraisals
are based only on surface details. Although she
asks for constant feedback, the only response
she gets is, “You’re doing fine,” or “Thanks very
much.”
Employees
who expect and want to succeed in a crowded business
marketplace want much more than simple feedback.
Naturally, they want to know how they’re doing
in their jobs in a general sense – “qualitative”
measurement – but also want to validate how they
contribute to the company’s bottom line – “quantitative”
measurement.
The
qualitative part is easy. Does the employee show
up on time? Does he or she do what’s expected
of them? Do they have great ideas? Do they go
above and beyond the scope of their job?
Quantitative
measurement or measurement by numbers is much
more difficult, but is most commonly accomplished
by measuring performance to the company’s goals
or initiatives. For example, in a retail setting,
factors like total sales, number of satisfied
customers, number of retained customers and other
areas are measured. Most often, each industry
has certain performance measures, which impact
a company’s bottom line. Each offers many opportunities
to measure – and increase – performance. Each
company has different factors, tasks or activities
with regard to what is measured, so there is no
book to follow in order to create these measures.
Some industries that respond well to performance
measures, include health care, auto dealerships,
retail and manufacturing, just to name a few.
The
greater key to quantitative measurement lies in
how you do it. Think about it: can you get excited
by being held accountable to find five new prospects
in any one month?
Creativity
is the answer, and performance measurement should
be fun. Here are a few examples in which “numbers”
were mixed with “creativity.”
March
Madness
Western
Michigan University in Kalamazoo, Mich., incorporated
a sport’s theme into the way its staff handled
new student admissions. March Madness is the familiar
term for the NCAA Basketball Tournament in which
sets of college teams compete for the national
title. The theme not only emphasized the college’s
passion for the game; it also described the fervor
of activity each spring when prospective students
inundate the school with applications for admission
– hence the term, “madness.”
Based
on the theme, the performance measurement culture
incorporated feedback into the office’s daily
activities – with huge success. The project began
in the office mailroom where weekly performance
feedback was having little, if any, impact on
performance. To communicate accomplishments, the
staff was content with posting a small, black-and-white
line graph that detailed the staff’s performance.
This provided group feedback and was updated weekly.
Employees and supervisors paid no attention to
the graph, and performance failed to improve.
Creativity
was born! Based on the March Madness theme, the
feedback graph was enlarged to a poster-sized,
color chart with balls and hoops as symbols in
place of bullets and plotlines. Think of USA
Today’s graphs and charts as examples. Just
this simple, small change resulted in increased
interest in feedback and performance, additional
ideas for process improvements, added social recognition
and reinforcement, and improved performance.
Absenteeism
Although
it might be considered a qualitative measurement,
absenteeism in business is a very real, valid
concern. Not only are employees evaluated by the
number of days missed, but absenteeism contributes
to loss profits. According to NovantHealth, 15
percent of the work force causes 90 percent of
absenteeism. Emotional factors account for 61
percent of time lost, and the typical employee
is absent eight days per year. Absenteeism costs
employers 1.75 percent of an absent employee's
wages, and companies spend 5.6 percent of their
payroll on absenteeism.
With
statistics like these, you should be concerned,
but what can you do to motivate employees and
prevent absenteeism? Be creative!
A
large hardware company introduced a lottery to
reduce absenteeism. Only employees with no absenteeism
for one month could participate. In every department,
participants could win prices, such as a television,
a bicycle and other gifts. Although some may consider
this an isolated example, the results speak for
themselves: there was a 75 percent reduction
in absenteeism and a 62 percent reduction
in costs.
Another
company tried to find the answer through a game
of non-gambling poker. Every day, employees who
were at work drew one card, and those who worked
the entire week drew five cards on Friday. The
player with the best hand won $20. Due to this
game, absenteeism lowered to 18.2 percent, and
even when the game was played less frequently,
absenteeism remained lower than previous numbers.
Applying
These Ideas to Your Company
Industry
examples illustrate creativity, but what can you
do in your own company to make performance measurement
fun?
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Begin
by creating an employee committee to brainstorm
ideas and submit three to five well-thought-out
examples of games, contests or strategies.
Just the idea of asking for employee participation
is a positive step in itself, and once the
ideas start flowing, they never stop. Even
if your company is small, you still can ask
two employees to form a team and come up with
ideas. |
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Take
baby steps. The old adage, “Walk before
you run” is valid. Begin these kinds of measurement
programs on a small scale without spending
too much time in the planning and implementation
stages. If something takes up too much time
and you’ve lost productivity due to trying
to be more creative than you need to be, the
effort is a non-issue. |
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Think
Outside the Norm. Just because you have
a professional image doesn’t mean you can’t
do something out of the ordinary. Again, the
object is to be as creative as possible. |
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Above
all, assess your creativity and performance
measurement techniques on a regular basis,
or measure the measurement. Without some kind
of evaluation built into the activity, you
won’t know whether you succeeded and can’t
figure out how improve for the future. |
To
ensure your creative passions align with performance
measures that will positively affect your company’s
profits, contact your business performance advisor
today.
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Are
You Ready for Change?
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Our mission is to provide information and strategies
to business owners and managers for improvement
in the effectiveness of its business management
so that key objectives can be realized.
|
|
Ted Hofmann
- Principal/Senior Consultant
John Morre - Principal/Senior Consultant
Linda Panichelli - Principal/Senior Tax
Consultant
CFO Plus, LLC
1450 Grant Avenue, Suite 102
Novato, CA 94945-3142 |
Home Office |
: |
415-898-7879 |
Toll
Free |
: |
866-CFO-PLUS
or 866-236-7587 |
Fax |
: |
415-456-9382 |
Email |
: |
thofmann@cfoplus.net
jmorre@cfoplus.net
lpanichelli@cfoplus.net
|
Website |
: |
www.cfoplus.net
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On
Your Mark … Get Set … Change!
Today’s
business environment isn’t what it used to be,
but it would be cliché to say that the only
constant is … change. You can blame it on the
new millennium or the dramatic shift in our
nation’s economy that paved the way for all-things-different.
Regardless of how you slice it, two factors
are unshakably certain: the landscape of business
will never be the same again, and you
can’t count on the same tried-and-true methods
of getting your product or service to market.
It
is without a doubt that the next decade will
bring dramatic change to all aspects of the
workplace, including demographics like the size
of the workplace, age and income distribution;
white and blue collar jobs; and products and
services. Furthermore, as we become even more
technologically astute, varying methods for
creating productivity also will become different.
How
do you begin to change? Start by understanding
your clients, customers, employees and the changing
face of the workforce.
The
Bureau of Labor Statistics indicates there are
about 127 million working Americans, but in
just four years, this number increases to 133
million. While the 25 to 35 age group decreases
about 10 percent, the Baby Boomers – 45 to 55
years old – will be about 50 percent larger.
Americans over age 50 will be among the wealthiest
we have ever seen, controlling $87+ trillion,
or nearly 70 percent of the U.S.
household net worth. White collar jobs will
comprise more than 60 percent of the workforce,
significantly reducing the traditional importance
of blue collar jobs in the economy, and almost
half of white collar jobs will pay more than
$40,000 annually.
The
9/11 tragedy certainly spawned an increase in
service-sector jobs, and according to the World
Future Society, there will be a shift of 25
million workers into service and information
industries. At the same time, generational groups
like Generation X and the Echo Boom have changing
priorities in the workplace. As more firms and
organizations strive to recruit younger employees
comprehending these two sectors is key.
Generation
X (born 1965-1976), for example, came of age
in times of recession, and experienced job restructuring
and job scarcity before they even turned 30.
Being the first technologically proficient,
online and techno savvy generation, they exude
entrepreneurism as the American dream. The youngest
work group – the Echo Boom – was born from 1977
to 1994, so eligible workers are now in their
mid-twenties. The Echo Boom generation is more
relaxed about the corporate world than their
Gen-X counterparts, but they will shape the
workforce on their own terms and enter it with
high expectations.
While
this information probably comes as no great
surprise, it does prompt the business professional
to reconsider and redefine the way the company
or organization recruits and retains employees.
Any notion that perks like free parking, pizza
parties and goofy golf will keep someone around
until retirement must be completely erased.
In fact, both the Gen-X and Echo Boom would
frown on such so-called “perks,” and instead
want to know how to make a difference
for the company so that his or her own goals
can be met.
Some
of the changes employers may soon face include:
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There
will be more emphasis on job performance
and less on college education. |
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Career
paths will be less predictable and jumps
within companies will be the norm; the job
as a stepping-stone to something greater
will be altogether different. |
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Expect
more fluidity in assignments and less written
job descriptions; these groups don’t want
to be pigeonholed into a set of bulleted
statements. |
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Praise
and reward will be mandatory and immediate;
we know Generation X wants quick gratification,
so why not give it to them? |
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Fewer
regulations like dress codes, a set start
and quit time (9-5), and others will not
inhibit individuality and originality. |
Moreover, managers will coach, motivate and
empower. They will direct less and less. There
will be more self-directed teams, with team
leaders instead of a “boss.” Self-directed team
leaders will need a blend of instinct, on-the-job
learning and patience.
While
these observations may sound good on paper,
reality is a different animal. To anticipate
change, begin by assessing your company accomplishments,
endeavors and other ways of conducting business,
then determine how your company’s management
style might mesh with the changing workforce.
Write down a set of ideas about how you can
change for the short- and long-term, and ask
each of your key managers and employees to do
the same.
Anticipating
– even embracing – change will help you make
the most of it. We can make a difference. Give
us a call today.
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Our mission is to provide information and strategies
to business owners and managers for improvement
in the effectiveness of its business management
so that key objectives can be realized.
|
|
Ted Hofmann
- Principal/Senior Consultant
John Morre - Principal/Senior Consultant
Linda Panichelli - Principal/Senior Tax Consultant
CFO Plus, LLC
1450 Grant Avenue, Suite 102
Novato, CA 94945-3142 |
Home Office |
: |
415-898-7879 |
Toll
Free |
: |
866-CFO-PLUS
or 866-236-7587 |
Fax |
: |
415-456-9382 |
Email |
: |
thofmann@cfoplus.net
jmorre@cfoplus.net
lpanichelli@cfoplus.net
|
Website |
: |
www.cfoplus.net
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Maybe
Cuba
Gooding, Jr. said it best, but it’s the performance
and profitability professionals that are making
good on this familiar statement. Business owners
today are smart – and sometimes cautious – about
working with outside consultants. Many demand
to see a return on investment scenario prior
to signing an agreement.
With
the new tools available to performance measurement
professionals, owners can immediately see how
simple changes in strategic areas of their business
can dramatically impact their bottom line. In
short, these tools can show you the money.
Accelerating
revenue growth through performance measures
continues to be one of the fastest-growing consulting
niches. Qualified professionals equip themselves
with state-of-the art tools that work well for
analysis and modeling, and offer business owners
an easy-to-understand interface for viewing
financial data.
On
the cutting edge, this technology presents owners
a real-time financial overview of his or her
business as well as specific information about
critical business drivers. Performance measurement
professionals can help with “what-if” scenarios
that will work to increase profitability. What
if I increase sales by X percent? What would
happen if I cut my inventory? How would cash
flow be impacted if I resolve an accounts receivable
lag?
Systematically,
these professionals can break complex financial
statement data into easy-to-understand performance
measures. Financial information immediately
becomes real and tied to day-to-day activities
– and outcomes. Suddenly, owners know
exactly what they must address to achieve their
desired company goals.
The
opposite is also true.
Company
owners that have immediate objectives, including
a certain cash flow threshold or an increase
in profits, can look to these well-equipped
professionals to provide the areas of business
to target to meet desired outcomes.
Goal
setting starts with describing exactly what
you want to achieve and by when. New software
efficiencies available to us combined with our
knowledge of performance measures can help you
plan and set goals, knowing you can achieve
them if you stay on course. Let’s get started.
Give us a call today!
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Unleashing
Creativity and Innovation |
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![](images/2003-MayJun/green_cfo.jpg)
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Our mission is to provide information and strategies
to business owners and managers for improvement
in the effectiveness of its business management
so that key objectives can be realized.
|
|
Ted Hofmann
- Principal/Senior Consultant
John Morre - Principal/Senior Consultant
Linda Panichelli - Principal/Senior Tax
Consultant
CFO Plus, LLC
1450 Grant Avenue, Suite 102
Novato, CA 94945-3142 |
Home Office |
: |
415-898-7879 |
Toll
Free |
: |
866-CFO-PLUS
or 866-236-7587 |
Fax |
: |
415-456-9382 |
Email |
: |
thofmann@cfoplus.net
jmorre@cfoplus.net
lpanichelli@cfoplus.net
|
Website |
: |
www.cfoplus.net
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What’s
the next great idea?
Just
a few years ago, who would have dreamed that
putting water in a bottle and selling it for
$1 would amount to beans?
You
get the drift … but how do you put yourself
and other workers in a creative mode to even
think of a great idea? How do you motivate your
staff to remain cutting-edge in their thinking,
when all they want to do is complete the next
project, close a new deal and go home at the
end of the day?
Unleashing
creativity and innovation doesn’t happen overnight,
but you can begin by thinking differently about
the way you and your organization invest time,
effort and resources into the creative process.
It’s a proven fact that the best workplace inventions
and ideas throughout history weren’t accidental
at all, although we’re conditioned to believe
they were because it’s so much more “glamorous”
and exciting to actually believe Michael Dell
became a millionaire overnight. It actually
took him quite a bit of time building and selling
computers out of his dorm room to even scratch
the surface.
While
it may be true that penicillin was discovered
through a strange case of mold, finding your
next big idea doesn’t have to be a surprise,
and the time you invest in this activity should
be considered golden. It’s a fact that successfully
innovative companies are more likely to generate
growth rates of 20 percent or more than less
innovative ones, and companies that generate
80 percent of their revenue from new products
consistently double their market capitalization
within five years.
Organizations
that rely only on their leaders will find themselves
terribly uncreative, because this approach sends
innovation to the fringes of a company. It presumes
that the organization is, by nature, dull and
slow, and that innovation can only be spurred
on by a handful of creative types whose official
job is to be innovative. As a result, this squelches
most workers’ ideas because they don’t see it
as their role to drive innovation.
In
addition, many people believe creativity can
only be driven by the company oddball or eccentric
who may be “hip” and “happening.” Think of the
cool cats who sip lattes and think of great
ideas all day long. Think again! Certainly,
organizations should not discourage this from
occurring, but creativity isn’t the process
of thinking of a great idea by sitting under
the Juniper tree. It’s a process of planning.
How
do you accomplish the creative process? Here
are some tried-and-true methods that have spawned
more than one great idea.
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Notice
Everyone – Innovation is all around
you, and usually begins from the bottom-up.
In your own company or organization, the
mailroom guy and the low-rung administrative
assistant may be the most creative people
on staff, and yet, you have no notion they
have an inclination to think of anything
outside the norm. Ask them for feedback
and advice. Put them on creative teams and
tell them you appreciate their efforts.
Emphasize that this is more than the company’s
suggestion box; you’re looking for more
creative ways to accomplish your goals and
drive performance. |
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Go
for the Biggest Obstacle First – It
might be easy to concentrate on more creative
ways to provide, for example, continuing
education to your staff, but you’re more
likely to achieve bottom-line results by
tackling something bigger and more immense
– like the sales process. If the largest
problem is finding staff who can “close
the deal,” then you’ve got to concentrate
on coming up with solutions to tackle the
issue head-on. |
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Create
a Business Case – When the challenge
is identified, you need to devise various
ways to solve it, and the natural inclination
is to brainstorm and use problem-solving
methods. If you work in teams, bring them
together. After the team agrees on a viable
solution, the next step is to create a hypothetical
(yet in actuality, it could be real) business
case to support new recommendations. This
quickly illustrates whether the creative
idea might work. Once you’ve tested and
modified the proposed solution, if it seems
to work, then present a formal proposal
to the organization’s leaders. |
Remember
that creativity and innovative thinking shouldn’t
be done in a vacuum; it should involve everyone
in your organization, and although it might
seem far-fetched, every idea should be considered
for its worth.
World-class
companies innovate every day in some way or
another. Highlight innovations other companies
have enjoyed. For more ideas on how to tie performance
measures with innovation, give us a call.
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Assess
Your Organization's Readiness
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Our mission is to provide information and strategies
to business owners and managers for improvement
in the effectiveness of its business management
so that key objectives can be realized.
|
|
Ted Hofmann
- Principal/Senior Consultant
John Morre - Principal/Senior Consultant
Linda Panichelli - Principal/Senior Tax
Consultant
CFO Plus, LLC
1450 Grant Avenue, Suite 102
Novato, CA 94945-3142 |
Home Office |
: |
415-898-7879 |
Toll
Free |
: |
866-CFO-PLUS
or 866-236-7587 |
Fax |
: |
415-456-9382 |
Email |
: |
thofmann@cfoplus.net
jmorre@cfoplus.net
lpanichelli@cfoplus.net
|
Website |
: |
www.cfoplus.net
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to
Execute Strategy
By Randall Russell |
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In
these times of economic turbulence, strategy
execution has become the new mantra for executives
who seek growth. Executives are demanding more
of their strategy efforts; a strategy must be
sound and executed before any benefits can be
realized. The Balanced Scorecard explains that
one major risk confronts all organizations who
hope to achieve strategic success.
Is
your organization achieving the promised benefits
of its strategy? If not, it's likely that you
are doing something wrong. You may have a flawed
strategy that requires some rethinking. Or,
perhaps your strategy is a good one but you
are not executing it well.
In
either case you can't really be sure what the
root cause is until you know that your strategy
is being implemented. You can't test the hypothesis
of your strategy in theory; you have to test
it in the field.
If
you have already implemented a Balanced Scorecard
you are well along the path to discover whether
your strategy will deliver the results you seek.
Your strategy map lays out your periodic reports
and strategic hypotheses, and review meetings
provide opportunities to see how well these
hypotheses are working. If you have implemented
your strategy through the use of this management
framework you should be well along the path
to become a strategy-focused organization.
But
if you aren't sure if your strategy is sound
– or if you are having trouble executing it
– it's not too soon to assess your approach
to strategic management to understand whether
you have done everything possible to achieve
the promise of your strategy.
According
to a study just released by Bain and Co., the
Balanced Scorecard is now in use in approximately
60 percent of organizations around the
world. This figure is up from 50 percent reported
two years earlier (a 20 percent growth
rate over this period). The study reports
that companies are increasing their use of "compass-setting"
tools such as strategic planning, benchmarking,
and mission and vision statements as they search
for growth opportunities in a tough economic
environment. The Balanced Scorecard clearly
provides an opportunity to integrate these
"point" solutions.
Numerous
factors explain the increased use of the Balanced
Scorecard; foremost among them is the fact that
it works. In a recent study of Balanced Scorecard
usage in Europe, none of the 42 companies in
the study currently using this management approach
plan to discontinue use.* In fact, the
level of commitment increases as usage becomes
more sophisticated. Even for those just getting
started, there is 100 percent commitment
to continue the practice. Among the top
five benefits associated with this management
approach was the fact that it was shown to improve
company results in the long-term.
Avoid
the Pitfalls
But,
in spite of a 60 percent penetration rate and
rave reviews from demanding users, there is
always the risk that you may not get it right.
Many organizations fail to achieve the benefits
of their strategy because they fail to make
strategy execution a core competency. The pitfalls
that await those who don't embark upon this
journey with adequate understanding and executive
commitment are well documented. Pitfalls that
can put your scorecard program at risk include:
- Members
of the senior management team are not committed
- Executives
are not accountable for implementation
- The
scorecard is treated as a one-time event
To
help organizations successfully execute their
strategies we have created a best practices
database to document the management practices
that contribute to strategic success. Organized
around the five principles of the Strategy-Focused
Organization (SFO) as defined by Drs. Kaplan
and Norton, we have identified 28 strategic
management practices that, when implemented
correctly, improve the probability of achieving
strategic success. These management practices
have been used to establish benchmarks for best
practices.
Putting Best
Practice to Use
In
one example, a large financial services firm
was enjoying significant strategic benefits
nearly two years into its Balanced Scorecard
implementation. However, they wanted to learn
more about progress they were making, and whether
they were truly on the path to breakthrough
results.
The
executive team compared its strategic management
approach to the best practices benchmarks.
Based on the analysis, they were able to identify
needed mid-course corrections that they have
since used to enhance their strategic management
practices.
Despite
the fact that this financial services firm was
already achieving results, they made some surprising
discoveries about their organization. For example,
in their review of SFO Principle #1 (mobilize
change through executive leadership), the firm
came to realize that executive accountability
for strategic initiatives was not well embedded
and aligned at the right levels of the organization.
They were unaware that this had not occurred
to the extent that they expected. If this
had remained hidden, progress would have begun
to lag as the lack of accountability failed
to reinforce the right behaviors to drive results.
Likewise,
after uncovering weaknesses in their processes
and activities to review the strategy and update
their Balanced Scorecard to reflect new realities,
the organization enhanced its management practices
to more thoroughly and accurately translate
the strategy through to the organization. As
well, similar changes were made under each of
the other SFO principles to eliminate a number
of bad habits that had crept into their management
practices, reducing the organization’s potential
to execute strategy to get results.
The
experience of this Balanced Scorecard firm
demonstrates that even those who are doing it
right can still make additional gains in their
strategy execution capabilities by benchmarking
themselves against best practices. The
simple fact is that, in the real world, no one
gets it right all the time.
Reprinted
with permission. © 2003 Balanced Scorecard Collaborative,
Inc.
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