Using Critical Numbers: An Action Checklist
Are you doing all you can to help employees move your company's key numbers in the right direction? Use this checklist to find out.
- Post the numbers. Put up the numbers in an easy-to-understand format where everyone can see them. Set up a thermometer, a wall chart, or an area on your intranet. Pass out financial and operation reports with critical numbers highlighted. Ask for a volunteer scorekeeper. The scorekeeper's job: update the board as often as possible. Get the word out any way you can.
- Teach the numbers. An important financial or operational number that nobody understands is meaningless. How do we measure operating efficiency? What counts as a warranty expense? Everybody in the company should know (and ideally be able to explain) the importance of key numbers. Give some pop quizzes, and hand out gift certificates or $20 bills for correct answers.
- Brainstorm. How can we affect our numbers? Gather feedback from the people closest to the numbers. Conduct experiments. Get volunteers to research key variables and report back to the group.
- Forecast the numbers. Can a department accurately predict where its numbers will be next month? Next quarter? If you can forecast a number correctly, you truly understand it.
- Play critical-number games. Managers and employees set a short-term target for their critical number, with a small reward for success.
- Develop critical-number bonuses. Your bonus system can be pegged to yearlong targets for your company's critical numbers.
Critical numbers get everyone in a company (not just managers!)looking at the same metrics and thus working toward the same goals.
Copyright © 1999 Open-Book Management Inc.