Key Performance Indicators

 

Sustaining New Directions

 A sequel to a Balancing Act about how to implement and sustain a balanced scorecard.

By Howard Rohm & Larry Halbach

https://tinyurl.com/3yd7dkyb

Six Steps To Create a Simple Framework for a Complex Business Turnaround

 

By Tony Uphoff

Regardless of the age or size of your company, your model, or the market you serve, at some point, you will be faced with the need to execute a turnaround. While the need for business turnarounds is common, they are remarkably challenging to do successfully. Boston Consulting Group research shows that only 20% of business turnarounds are successful today, down from 30% in the year 2000.

Having helped lead the transformation and successful turnarounds of several businesses, I can personally attest that turning around a declining business is incredibly difficult. Reducing it to a simple checklist runs the risk of over-simplifying a complex, challenging endeavor. At the same time, there are frameworks to help you focus on the main drivers of a successful turnaround. One last upfront point: Turning around a declining company is not for the faint of heart. It takes remarkable energy, fortitude, and emotional resilience. Ok…now on to the framework

1) Demand, Capability, and Margin

A primary reason that business turnarounds have such a low success rate is that some businesses are beyond saving. I always start with three core questions:

1. Is there a clear demand for the product or service the company offers?
2. Does the company have sustainable differentiation?
3. Can the company do so at a reasonable margin?

In my experience, you have to be able to answer yes to two out of three of these questions or a turnaround simply isn’t possible. It’s also my experience that if the answer to the first question is no, then there really isn’t a business to turn around.

2) Resources

Do a deep dive into how the current resources of the business are being allocated. Inevitably, struggling businesses have a disproportionate amount of resources tied up in the declining, unprofitable parts of the business, which starves potential growth areas. Certainly, understanding access to capital is a critical assessment to be made in a business turnaround. Access to capital can be a detriment in a turnaround, however, allowing managers to ignore the underlying problems.

Most successful business turnarounds involve the reallocation of resources, not the addition of new ones. Start by determining where you can shift resources and redeploy them for a better return as opposed to trying to add resources to an existing business that is failing.

3) People

Simply put, your job as a business leader is to recruit, retain, and develop the best people you can and continually put them in the best positions for success. Do a careful review of the organization.

Does the business have the right people, in the right positions, with the proper systems to enable them to be successful? Where are the talent gaps? Is the business organized properly? In many struggling businesses, organizational planning has been forgotten, resulting in a dysfunctional structure that is sub-optimal.

4) Product

A core reason businesses fail is a poor or nonexistent product strategy. Buyer personas and simplistic buyer journey models no longer work. Today, a more rigorous understanding of your buyers’ “jobs-to-be-done” is required. This process, pioneered by Harvard Professor and author Clayton Christensen, is now being used extensively in product design and development. By starting with your customers’ jobs-to-be-done, you will develop a deeper understanding of the problems they’re trying to solve that will serve as a guide for delivering a product that meets their needs.

5) Process

In knowledge work, creating, refining, and managing process is the key to generating scale. In analyzing failed companies, poor or sub-scale processes are often one of the main reasons for failure. The process can be tricky to isolate and analyze, too.

Process management needs to be a core competency in any successful turnaround. The best way to analyze process improvement is to look at your customer’s experience from interest-to-invoice. As you do so, you will find bottlenecks, duplicative processes, inefficiencies, and processes that can be eliminated, automated, or improved. Companies that have been in a sustained state of decline become slaves to a series of internal processes that have become irrelevant to customer value.

Let me restate this to be clear: Any internal process that doesn’t ultimately benefit customers should be re-examined and cut out if possible. You will find that in turnaround situations, it is in the process details where culture may rear its head. You may hear: “This is the way we’ve always done it” or “Our customers expect us to do it this way.” One of my personal favorites is: “We tried doing it differently but it didn’t work.”

In my experience, one of the quickest paths to business performance improvement is through process improvement.

6) Performance

Performance is a trailing indicator of the success of your people, product, and process efforts. Measure your success in these areas first. Then, measure and manage your performance.

One of the biggest challenges in declining businesses is that management gets caught up in the painfully obvious. The business is declining as opposed to focusing on the leading indicators that will help answer the question of why and what can be done about it. Set clear, measurable, and achievable performance metrics.

Many business turnarounds fail before they start based on management setting unrealistic performance metrics that the team doesn’t buy into. My recommendation is to organize your turnaround performance metrics around three key measurements:

1. Performance against budget
2. Performance against the previous year
3. Performance against a goal, if relevant

Beware of getting caught up in vanity metrics. In struggling companies, in an effort to find something to celebrate, managers can get caught up in tracking metrics that really don’t matter. Focus myopically and only on metrics that matter, set them realistically, communicate them openly, and celebrate success milestones along the way.

Final Thoughts

Over the course of my career, I’ve been fortunate to have been involved in four successful turnarounds and learned some valuable lessons along the way. Most of them, I learned the hard way! Helping to lead a successful turnaround is an invaluable career experience and one that every C-level executive has had or will have to go through.

https://tinyurl.com/bpa9z5za

Make Performance Improvement Strategic

 Have you ever wondered if your performance improvement interventions are aligned with corporate strategy?

https://bitly.ws/3gDxE

The Performance Cheat Sheet

 

The Performance Cheat Sheet.

To help you understand the Past.

Monitor the Present.

Target the Future.

☑️Here’s what the Performance Cheat Sheet includes:

🎯 5 Performance KPIs

🎯 12 Profitability KPIs

🎯 The Financial Performance Ratios

🎯 The DuPont Analysis

🎯 Project Profitability (NPV, IRR, PP, PI)

🎯 Gross Profit vs. Contribution Margin

🎯 EBITDA vs. EVA

🎯 5 Cash Flow Ratios

🎯 5 EBITDA Ratios

☑️ Use this Cheat Sheet to set up a Performance management framework that works for you and your organization.

It will help you make sense of past organization performance, manage the current one and strategize how to achieve your targets for the future.

https://bitly.ws/3g8fa

How to evaluate and improve your team’s goal performance

 

Hit or miss, once your team finishes a goal, you may feel compelled to rush to the next one. Don’t do it. Otherwise you could end up repeating a costly mistake next quarter — or realize, a year from now, that you got too comfortable with your “fail-safe” process, and other teams are passing yours by.

To guard against these kinds of painful (and potentially career-limiting) outcomes, you’ll need to continually hone your goal-setting process. Try pausing after each big goal to follow these tips:

1. Evaluate your team’s performance, including how much they learned and improved their process.

People tend to make win-or-lose evaluations of goals, but performance is rarely so absolute. For example, if you end up at 95 percent of a goal, is that the same as meeting only 50 percent? Would it have been worth the effort to push for those final five percentage points and burn everyone out in the process? Maybe. Maybe not.

Also be sure to consider less quantifiable yet critical factors, like whether your team learned, improved their process, and worked well together. Did they broaden their understanding of a new market, implement new time-saving software, or better leverage each other for problem solving? These kinds of things — more than whether they hit 95 percent versus 100 percent of a forecasted metric — will lead to future success.

So, how’d the team do on the goal? Factoring in all of your performance considerations, grade your team’s success — for example, on a scale of zero to one. Maybe your team earns a 0.9 if they hit their target metric but you think they could have collaborated more effectively, and a 0.6 if they fell well short but showed some improvement. You’re not always aiming for a one here — too many perfect scores could mean your goals are easy.

Then, walk through the full evaluation in a team debrief (see point No. 5). By including the team’s learning and improvement, you’ll be letting your team know that those things matter to you, and should matter to them, too.

2. Consider what you learned about your team’s dynamics and address areas that need improvement.

How your team worked together toward the goal is one of the best predictors of how they’ll work together in the future.

As part of assessing your team dynamic, consider the important informal roles that team members played during the goal process. Ask yourself:

• Who stood up for the values and mission of the team or company — for example, by trumpeting these things or by subtly modeling a value in their behavior?
• Who provided support when others needed it (technical, emotional, or both)?
• Who acted as an expert, and on what tasks (and did the rest of the team view them as expert)?

Depending on your answers, you may realize that some of these roles still need filling. Consider who on your team might fit the bill. Or, you may need to encourage a team member to embrace their informal role more fully, or gently suggest that someone tone it down (for example, by saying to an overzealous expert, “Wei knows a lot about this too, and I’d like to be sure she has a chance to share her expertise”).

3. Determine whether you or your team made undue sacrifices for the sake of reaching your goal.

Goals give you tunnel vision — great for helping you and your team focus on an objective, but potentially terrible for noticing what that focus may be costing you. So when reflecting on the goal process, check whether high expectations or stress have caused you or your team to:

• Skip out on regular obligations. Canceling 1-on-1s lately? Not making time to give advice or help other teams? Missing more dinners at home? It may be totally worthwhile to make these sacrifices once or twice, or for a short period. But have they become a destructive habit?
• Lose interest in the work itself. Sometimes as the pressure of meeting a goal number or deadline rises, the work you or team members once loved just doesn’t seem that fun anymore. Psychologists would call this a reduction in intrinsic (or internal) motivation. This trade-off tends to happen slowly and, over time, can hurt performance and even lead to burnout.
• Take shortcuts. Some types of shortcuts may be improvements, like reducing steps in a legacy process. But plenty of others, like signing low-quality customers or deliberately inflating cost estimates, are potentially dangerous. It’s easy to say, “That doesn’t happen on my team!” But one third of workers report observing misconduct on the job, according to global surveys by the Ethics & Compliance Initiative.

If any of these sound familiar, you’ll need to address the issue, either with individuals or through team feedback.

4. Assess your coaching and leadership performance.

Self-reflection is critical to improving as a manager. Think back to pivotal moments in the goal process: expectations you set (or didn’t set!) around the objectives, feedback you gave to both individuals and the team, tasks you delegated, coaching you delivered along the way. What were the results of your actions? For example, in the case of feedback you gave, did the team heed and implement it? If not, you might want to work on giving feedback and your persuasion skills.

You’ll get a fuller picture of your performance if you ask your team members for feedback. Ask them what you did that worked well and what didn’t, so you get specific results that aren’t all positive. For help navigating what can be a tricky ask, given the power dynamic, see the video below.

Experienced manager Grayson Morris explains how he “seeds” the conversation to get more honest feedback from direct reports. 

5. Conduct a debrief with your team.

Whatever you call it — a debrief, post-mortem, retrospective — schedule it soon, before you and the team are onto the next project or packing your bags for vacation. Your goal should be to walk out of the room knowing what the team’s going to do differently next time, and who’s responsible for making what happen.

This is often tougher than it sounds; teams tend to focus on dishing out recognition and possibly blame during a debrief — to the exclusion of what to do with this information. As these acknowledgments come up, you can incorporate the feedback you developed while evaluating yourself and your team, as well as ask, “What steps can we take to improve this next time? Who might be responsible for making this change?”

6. Resolve to implement at least one change that comes out of the debrief meeting.

Too often, teams go back to their desks after debriefs and forget what just happened, which means everyone just wasted their time. One debrief may not give you all the answers, but likely it will give you at least an idea or two to test, which will provide you with even more data to learn from.

You’re not looking to do some massive experiment that stakes the team’s reputation on the results. As experienced manager Michael “Zipp” Zippiroli explains, he prefers small, controlled tests: “I am uncomfortable with my team doing whatever they want,” he explains. “I am comfortable with them saying, ‘I have a hypothesis I’d like to test. My hypothesis is X, and I’d like to do five calls to try it.’”

Just make sure you’re measuring what you think should change (as well as important things you don’t expect to change, to check your assumptions). Also have a group doing it the old way, so you have a comparison for your test.

7. Communicate your results and plans beyond your own team, sharing what’s working and how the team intends to improve.

Once you have your team’s results, you’ll also have an audience — your manager and peers want to know how things went. And there may not be a better time to give your team’s ideas a voice. In addition to communicating how your team performed:

• Ask for additional input from your manager. Hopefully, you’ve been getting your manager’s feedback all along. But it’s worth asking for more now that results are in and everyone is thinking about what comes next.
• Ask peers how their teams fared, and solicit feedback. If your team is an outlier — performing really well or really poorly — it’ll be valuable to learn more about why. And if a bunch of other teams struggled, too, that may ease the pressure on your team.
• Consider getting feedback on any planned tests (point No. 6). Peers facing similar challenges could offer some great input, as could your manager. Or, you may need approval from your manager before doing a test, depending on your relationship and your organization’s culture.

https://www.franklincovey.com/

CEO's Performance Checklist

 

CEOs want to achieve peak performance.

But…

→ They struggle to align goals across their organizations.

→ They struggle to implement effective performance management systems.

→ They struggle to make informed decisions based on data, diverse perspectives, and risk assessments.

🎯 Here’s a 15 point checklist with 140+ check points to help CEOs overcome these challenges and achieve performance excellence:

1. Align Organizational Goals

2. Develop and Implement Effective Performance Management Systems

3. Enhance Data-Driven Decision Making

4. Create Balanced Incentive Structures

5. Foster a Culture of Continuous Improvement

6. Improve Risk Management Strategies

7. Enhance Leadership Communication Skills

8. Build Resilience and Adaptability

9. Invest in Employee Development and Succession Planning

10. Promote Ethical Leadership and Corporate Governance

11. Adopt a Global Perspective and Cultural Sensitivity

12. Focus on Personal CEO Development

13. Leverage Technology for Efficiency

14. Build Strong Stakeholder Relationships

15. Ensure Sustainability and Social Responsibility

Oana Labes, MBA, CPA