Whether its batting averages, touchdown passes, or simply the score of the game, professional sports teams have always analyzed performance based on statistics and set a standard for what good looks like. Every athlete and team’s performance is measured and ranked for the world to see. There is no question who’s performing and who’s not.
Scorecards are not just for sports teams. Identifying, tracking and ranking a series of benchmarks are critical when developing a high-performing organization. Why? Because record keepers are record breakers. Marco co-founder Gary Marsden first shared that phrase with me back in the early 90’s. He would always say that if “you can’t measure it, you can’t manage it.” He was right. You do need to look beyond the traditional financial statements and include other relevant metrics that drive success. Remember keeping this information in a drawer is not going to help you accomplish your goals. You need to share it with your team on a consistent basis.
At Marco, we consistently review results, benchmarks, and rankings and share them company-wide at our MOR (Monthly Operating Results) meetings. From administration and accounting to sales and service, we have established a series of metrics in order to achieve our corporate initiatives. We consider this a best practice and have shared this information even before we were an ESOP.
Scorecards Beyond Sales
As a direct sales organization, we measure all of the traditional metrics (i.e. sales revenue, gross profit, new accounts, etc.) But in addition to measuring sales performance, we have incorporated key benchmarks designed to improve the customer experience and the efficiency of our company’s operations.
For example, in service, we measure a series of key performance indicators such as parts utilization, inventory accuracy and first call effectiveness – meaning we fix it right the first time. For accounting, some metrics include accounts receivable days and the number of invoices processed. For operations, it includes inventory accuracy and expense recapture. When we are accountable for our performance, we’ll achieve the desired results.
Best efforts simply are not good enough. This may sound harsh, but if you want to be a high-performing organization, it’s essential to create a culture driven by determined results. Imagine if we didn’t keep track of batting averages. How would we identify who is the best? How would baseball players know what to strive for? Records are made to be broken – in baseball and in business.
If you want to perform in the top quartile of your industry, you need to know what good looks like - both for the organization and the individual. Don’t be afraid to rank performance. In my experience, individuals rarely acknowledge when they fall “below average” until they see a ranking. Statistics don’t lie.
Making It Happen
For over 25 years, we have consistently ranked and recognized individual and company results on a monthly basis to promote a high-performance culture.
Here are a few recommendations on how to develop and use metrics to build or sustain a high-performance organization:
- Identify metrics that apply to your organization. Go beyond the obvious (financial statements) to determine what good looks like in sales, service, warehouse, administration, etc.
- Acquire industry performance benchmarks. Being involved in peer groups or hiring industry consultants can provide resources to establish measurements and benchmarks. We do both.
- Track and report regularly. A monthly review helps both the organization and individuals achieve progress. In some cases, we monitor and display metrics in real time.
- Reward success. Providing incentives for reaching benchmarks is essential, but it doesn’t always have to come in the form of money. We’ve used cookouts, written and verbal recognition, and often personal communication from me (which is my favorite part of the job).
Here is a book that I would recommend that covers this subject quite well: “The Great Game of Business” by Jack Stack. This book talks about the importance of creating a business scorecard to gauge if you are playing the game to your full potential. I first read it as part of a management team exercise back in the 90’s. It’s still a good read today.
Remember, record keepers are record breakers. Good luck keeping score!