How to Build Your Company’s Gas Gauge

All organizations have warning signs that are a lot like the “check engine light” in a vehicle. They are signaling the leader (driver) that there is an issue with how the vehicle is running. The check engine light is a trigger to pull over and get a master mechanic (the managers) to help them diagnose how the vehicle is performing on a daily basis.

Many organizations measure things, but often they are not measuring the right things. What people do not realize is that metrics drive behavior.

Many companies have one key metric, what is this metric? Revenue, $$$$’s, profit.

These are important metrics but to achieve them we must measure so many activities, therefore there are other more tactical metrics that define our performance toward this goal. If leadership is driving the organization, shouldn’t they have a dashboard to understand how the vehicle is running?

Imagine if your car had no gas gauge. What would happen? You would likely run out of gas.

What behaviors would need to change? You might top off the gas many times versus when you know it is running empty.

How would it change the way you drove? More frequent stops or you may even want to carry a reserve gas can. This would slow you and be inefficient.

How many things are like this in your company today? Leadership’s role is to provide the dashboard, and the measurement gauge, so the company doesn’t run out of gas!

Company metrics should be linked to key metrics from strategy down to individuals in production that will help determine performance against the goal and presented in a dashboard that everyone can see and understand. Those metrics should represent cost, quality, output, safety, and morale. The metrics chosen should align with the corporate goals, down through the value streams/work teams, and finally down to the individual level.

When you create your company metrics, there are three levels of metrics.

1) Company - these metrics should be aligned with the company's strategy and will measure its success.

2) Value Streams - these are the metrics that will measure the department, division, or even the production lines of the organization.

3) Work Team (cells) - These are the metrics that each individual team should be measured by no matter if it is Office, Engineering, Sales, Marketing, Warehouse, or Production.

Below is an example of how to link metrics:

The best way to establish metrics is to engage the people who will be measured by them, and then ensure that they can see them. Visual management and metrics work hand in hand to ensure we are on track, and that we react appropriately if we are not meeting the goals.

If we use them for a data-driven approach it will remove the emotion from the daily tactical decisions that need to be made to keep the car on its course. In the end, when this is done well it defines how we perform and how we behave!

To learn more about how the Business Excellence Group can help you develop and display your metrics contact us at [email protected] or check us out at www.thebizxgroup.com.?