“A culture of discipline is not a principle of business; it is a principle of greatness.”Read More
Strategic Discipline Blog
Yesterday my reality check came.
A question that frequently comes up is what should I have Key Performance Indicators for in my business? Certainly there are lot of options. Revenue and profit margin are Key Performance Indicators that everyone should monitor, however these are lagging indicators. What Key Performance Indicators do you have in place that predict your revenue and profit margin? Do you monitor your sales effort and have indicators that report on your sales pipeline? How reliable are these? Do you monitor your variable costs and fixed expenses? Contribution margin is a good forecaster of profit margin as well as gross profit margin. Yet do these give you enough information far ahead of your performance to be true leading indicators? With time and practice whatever number you choose to watch you can discover which key metrics help predict the crucial outcomes in your business.
Employee Engagement is a critical factor in getting maximum performance. I’ve pointed to this before and the work Gallup has down developing their Q12 [12 questions from the book First Break All the Rules that gauge engagement in the workforce] and how Best Buy uses these questions for their Core Score. You can read more on how just a 2% increase in employee engagement at Best Buy resulted in an additional $70 million in profitability here.