Red Flag Management

Ask yourself what you as a manager focus on? Where things are going well or not so well? Majority of the answers will probably be on those things that are not going well. There is a tendency that just like a bull once a manager sees a red flag or red traffic light in a report they will focus on what’s going wrong and what can be done to improve it. I have previously written about this in The Non-Performance Culture however we need to examine this issue in more detail and ask ourselves: Are we maximizing performance by constantly spending our time on the red flags in our management reports?

First you would need to analyse the maximum potential of each of your products, sales channels etc. and say given the capacity we have available what would we be able to deliver in a best case scenario. Some products might find themselves in performance band to target of (A) 95-105% whereas others could range from (B) 80-130% etc. So if your target is 100% and (A) performs at 97% i.e. a red flag and (B) performs at 105% i.e. green flag which should you spend time on improving to maximize your performance? The answer is a pretty clear (B) as your improvement potential here is 25%-point whereas (A) only has a mere 8%-point.

Too often companies fail to perform an in depth analysis of the max potential of their products and find themselves spending their time on improving performance in a suboptimal way. By focusing on improvement potential rather than red flags you will have a much higher chance of maximizing your performance. You will also find out if by allocating more capacity to a certain product you can increase performance even more whereas taking capacity out from other will not make a difference in terms of the performance. This whole exercise of course requires that companies are flexible and can move around focus and assets as needed. At the end of day staring yourself blind on those red flags will limit your potential, but of course doesn’t mean you should disregard them. You just need to ask the question where there is the highest potential to maximize your performance. It could as well be from a “red flag” product rather than a “green flag”, but if you haven’t done the analysis you will just be steering your company in blindness.

Let me know what you think? Is red flag management the right way to increase performance or are we missing out on significant potential?

For more articles on leadership, performance management and finance transformation check out some of my other posts or click the follow button to see future content as it is published.