How to introduce operational metrics

With the evolution of remote work, it’s imperative to include your staff in setting and tracking goals. We refer to this as operational metrics. Have team members own processes, then encourage them to improve those processes in departments like sales, procurement, bill-pay, overdue AR and inventory.

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As opposed to strategic KPIs, operational metrics measure your business performance from a day-to-day point of view.

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Five key areas to think about when measuring business performance include: quality, speed, flexibility, dependability and cost.

From there, begin to think about which measures to use for each. These may differ depending on which department you are introducing operational metrics to. For example, quality in manufacturing might be measured by defect rate but in customer support it might be measured using net promoter score.

Focus on which are your company weaknesses (e.g., gross profit margin and customer lifetime value). But don’t spread your resources thin trying to optimize every metric immediately. Start by giving your team financial transparency related to their department to establish a growth culture. Using simplified, internal versions of the financial reports mentioned in #1, focus on the line items directly affected by the work that they do.

Next, give them the ability to control those results. Set clear targets and write names next to those budget line items to build accountability.

3 Steps to introduce operational metrics to your team:?

1?? Choose KPIs

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Focus on which are your company weaknesses (e.g., gross profit margin and customer lifetime value).

?But don’t spread your resources thin trying to optimize every metric immediately.

2?? Create Reports

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Start by giving your team financial transparency within each department to establish a growth culture.

?Using simplified, internal versions of the financial reports, focus on line items directly affected by the work that they do.

3?? Offer Autonomy

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Next, give them the ability to control those results.?

?Step back, and when you do check-in focus on missed opportunities instead of threats.

Cloud CFO Tip:?Proper incentives are key so remember to provide a stake in the outcome. This is one of the 4 ways we suggest you can?improve employee retention strategy.

Forgetting to get your team involved is a missed opportunity and ultimately can contribute to business losses.

Get in touch to uncover which operational metrics are most important to your bottom line.