3 Key Measurements
Which three measurements give the best sense of your company’s health? Whether you’re the business owner of a multi-site, multinational organization or the owner of a corner store, there are three critical measurements that denote the overall health and well-being of any organization: employee engagement, customer loyalty, and cash flow.
No company, small or large, can remain competitive in their chosen market without employees who believe in the mission and know what they need to do to achieve it.
That’s why it is critical to measure the level of employee engagement at least once a year … anonymously. And we’re talking about more than finding out if they like the coffee in the employee lounge. One simple question on an employee survey can take care of it: "Are we all on the same team here?"
Growth is the next link in the "successful company" chain. How can you grow without increasing your customer base or product offerings? How do you know if you’re on the right track and providing the products your customers need and servicing them in the way they want? Why, you ASK, of course! And don’t just ask your good customers; ask the ones whose orders are intermittent or dropping. An answer to the simple question, "How likely are you to recommend us to a friend or colleague?" will speak volumes and provide your company with the right business direction.
Lastly, there’s cash flow. If you ask any business owner how they measure their cash flow, they’ll have an answer for you, for sure. But be sure they’re specific about the definition of cash flow. Most profit and loss numbers have been massaged through the accounting process. They need to be looking at true, fluid cash flow.
Business owners and leaders need to ask themselves:
1. How do you measure employee engagement? How often do you do it, and what do you do with the results?
2. How do you measure customer loyalty? How often do you do it, and what do you do with the results?
3. Does your current cash flow situation allow you to return cash to shareholders, pay down debt, and/or borrow more to grow faster? If not, how much do you need to do so?
6 Critical Questions
Speaking of a company’s health, I participated in a seminar recently with Patrick Lencioni, executive consultant, speaker, and best-selling author. In his new book, The Advantage, Lencioni highlighted two requirements for company success: it has to be 1) smart (strategy, marketing, finance, technology) and 2) healthy (minimal politics, minimal confusion, high morale, high productivity, low turnover). He elaborated that there are four disciplines of a healthy organization, and one of them is to create clarity. He stated that healthy organizations minimize the potential for confusion by asking themselves these six critical questions:
1. Why do we exist?
2. How do we behave?
3. What do we do?
4. How will we succeed?
5. What is most important, right now?
6. Who must do what?
As a business owner or leader, how would you, as well as your colleagues and employees, answer these questions? Would all of the answers be consistent?
Staying focused on the three key measurements and these six critical questions, making improvements and measuring the results will help your company be healthy and successful!