The Postcard - Tim Hill
In 1974, as financial controller of Club Caribbean in Jamaica and after qualifying as a chartered accountant with KPMG, I received advice from Robert Salm, who had retired three times after making in excess of £1m each time. He told me: "You can run a company, even the size of Marks and Spencers on the information you can fit on a postcard".
This is just as true today, as anyone who has been given reams of financial information weighing several pounds before a board meeting can testify. The more data presented the harder it is to know what is happening. By looking at the 7 or 8 Critical Success Factors on a regular basis it is easy to see the trends and, as soon as a blip appears, the cause can be quickly ascertained.
Eliminate the surprises before they become shocks!
Human beings are creatures of habit and familiarity can breed complacency, with important changes over time going unnoticed. In business, monitoring can be critical to success and deviations away from trends need to be explained. It could be positive; for example, a product has been presented in a different way or new benefits have been shown arising from an existing service that has caused an unexpected increase in turnover. On the other hand, the trend might have gone the wrong way, perhaps because additional costs are being incurred. Whichever way the effect manifests itself, effective monitoring of key indicators will help eliminate the surprises before they become shocks.
This, of course, will be different for every company and will comprise hard and soft issues. Knowledge of some items will be critical to all businesses e.g. sales, cash, aged receivables (debtors), payables (creditors), staff morale. There are likely to be 7 or 8 key factors that every company should be measuring on a daily / weekly basis, such as - orders, Right First Time, staff turnover, repeat customers, levels and quality of stock and work in progress.
Once it has been decided what needs should be measured, simple systems can be created so that the data "falls out" with minimum effort. This is done by finding ways to obtain the Key Performance Indicators easily. It may simply require the tweaking an existing piece of software to produce the required report or the addition of an extra column to a record sheet.
In the current economic climate, especially for those running and managing businesses, there is no doubt that "times are hard". However, most companies will survive and some sectors will thrive. What will make the difference between success and failure is not just hard work and being exceptionally good in a specialised field, but also knowing how well different areas of the business are performing so that the right decisions can be made at the right times.
Remember the maxim: Measure what you manage and Manage what you measure to maximise profitability.
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