Strategic Discipline Blog

I’m on vacation this week so I’m reposting a couple of blogs that contain messages that warrant repeating.  Pearson’s Law, originally written 12-15-08, exemplifies the importance of metrics and Positioning Systems Strategic Discipline formula. It’s largely reprinted with a few minor additions. Do you want to see dramatic improvement in your people’s performance?  Read further.

Have you heard of Pearson’s law?  If you’re in business you should be aware of it and putting it in to practice every day.  There’s some question if Pearson’s law is truly from Karl Pearson, who is distinguished for having developed the discipline of mathematical statistics or author Thomas Monson.  Regardless, the identity of this quote is irrelevant.  The most important thing you need to know is what the quote is and why you need to be working with it every day in your business.

The quote is: "When performance is measured, performance improves. When performance is measured and reported back, the rate of improvement accelerates."

Quantification in your business is critical to success.  As we work through an increasingly difficult economy it is more acute than ever before that you are measuring performance. 

So how are you doing with measuring performance in your business?  Is everyone in the business aware of the number one priority for the year?  Is there a scorecard somewhere in the office that monitors progress on your success toward achieving this priority?  Is each department aware of their critical numbers and are they reporting on their proficiency to consistently reach these numbers?  Does every employee in your company have clear, job descriptions, established performance numbers that quantifiably deliver whether they are meeting the required standards for their position, and are they reporting their results on a weekly if not daily basis?

Businesses that succeed are always those that are aware of the critical numbers that drive success in their industry and specifically their business.  From the top of the organization to the bottom, leadership, executive teams, department heads and each employee is focused on achieving the outcomes that produce the numbers that are required for success.

The results of a recent bank visit to one of our Gazelles coached customers provides significance to the importance of producing visible quantification for performance in your business.  As the bankers toured the business they noticed in each cubicle, charts on the walls that provided a red, yellow, green, and super green notation indicating performance levels for the specific numbers this person produces.  In the break area prominent charts displayed the businesses performance in a similar fashion for the quarter and year to date goals and themes.  In addition, one room was designated as their situation room where the executive team and departments would meet to discuss weekly, monthly, and quarterly goals and assess progress and collaborate to solve issues and problems.  This room’s walls were decorated with similar charts for business, department, and specific customer service goals for the business.

By the end of the tour the bank officers were so impressed they felt they could provide a better loan package and improved rates to this business.  They noted how focused the business was on the critical numbers for their business, and how each individual in the business was aware of the necessity to produce specific results in turn to help the business achieve its goals.  The accountability factor of these chart, they said, was the sign of a well-run business and was sufficient to give them confidence that this business would continue to be successful in the future.

Is your business doing this type of accountability for your team members?  Does your business have company, department and individual dashboards so that everyone can measure their performance against expectations?

One of my favorite books, by Ralph C. Stayer & James Belasco, Flight of the Buffalo, contains a quote that echo’s Persons Law and which every business owner should heed, “Do the people in your company know how well they’ve done before they go home every night?  People perform what they measure – help the performers to measure the ‘right’ stuff.”

Remember Pearson’s Law: "When performance is measured, performance improves. When performance is measured and reported back, the rate of improvement accelerates."