69. Business Performance Measurements: How to Increase Production, Profit and Morale - Part 2

In the first article of this series I defined the basic terms and philosopy of KPIs. Now here is some of

My Personal Experiences with KPIs

During my 5 years at Woolworths we monitored the store sales on a daily and weekly basis. We set weekly and quarterly budgets for sales and profitability. We never called them Business Performance Measurements or KPIs, we were just interested in the figures as a gauge of how well we were doing in keeping the stock on the shelves and meeting competition.

When sales were up, we rejoiced. When sales were down we worked harder to correct what we perceived was the reason they were down.

Day one at AMP they taught me: "It's a numbers game - you make ten calls, you get three appointments and one sale. The reason sales people don't succeed is that they don't do enough "tens"."

So in the Looking Ahead Plans Book AMP provided I kept those statistics religiously for 12 years. Sure enough, whenever I was not making enough money I would look back at the stats in the book and prior to the lean times I had not been doing enough calls. I'd increase the calls and the income would also rise.

That's how I learned the value of keeping weekly tabs on my personal production.

I started The Money Professionals in 1989. Pretty quickly I had 16 salespeople working with me that I needed to manage. Recalling what AMP taught me I created a spreadsheet to track the calls, appointments gained and sales. Now that I had a spreadsheet to do the number crunching I saw that I could easily add other statistics to track that would help manage the sales people. After I added a few more I was able to print reports the likes of which I was told nobody in the insurance industry was doing.

Then came the disaster. I added another straw (week's data ) that broke the camel's back (spreadsheet) and overwhelmed the computer. The spreadsheet was now officially too big to load. RIP one spreadsheet. Long live the database!

I took the formulae from the spreadsheet and put them into the database language. I was then able to get even more insights from the additional figures I could get the database to compute based on all the data in there. A couple of people looked over my shoulder and said what I was doing was so good I should be doing it full time.

Circumstances conspired to grant me that opportunity. A print broker needed a custom database program so I took what I had created for myself, added some functionality and delivered what he needed. I was now officially a commercial application developer.

I added number and value of paid hours programming to the list of weekly statistics I graphed. I started to market myself as a programmer.

In 1996 I heard that Mr Lever from Lever and Kitchen, the soap people, had said in 1906, "We know 50% of our advertising works, we just don't know which 50%!"

Determined to not let that happen to me I added a Promotions table to my database. I linked each person who responded to the promotion that elicited the response. I was able to produce reports that told me to the penny what worked and what didn't work. I was able to do short run test promotions to find what worked and quickly discard the failures.

Since then I have added various types of statistics for various clients and observed the benefits that resulted from keeping them.

So I have kept and used statistics for most of the time over the last 32 years. Why not all the time? Good question! And I hope you learn from my mistake here.

Sometimes I thought I was too busy to add up the figures at the end of the week. I was programming software on a tight deadline and I just kept working. Bad mistake! Why? Whether you are a multi-national corporation or a one-man band it is very beneficial to draw a line in the sand at the end of the week, count the numbers and take stock. How is it beneficial?

Firstly, it gives you an end-point for the week, a fresh beginning. Some weeks are winners, some aren't. When the week is a winner, you need to take stock and truly identify what caused the win so you can take appropriate measures to keep the roll going. When it is not a winner, when it is a real bummer of a week, you also need to take stock and identify what you need to alter to make sure it does not happen again.

Not having a definite end-point for the business week, such as midnight Thursday or midday Friday, causes the weeks to roll into one long blur. From personal experience, not having a set time each week to do a formal analysis on the "state of the nation" with regard to your business creates a mental condition of "not knowing" about the true state of the business. This contrasts markedly with the certainty you obtain from knowing the exact figures for each area of your business. Try it for a while and you will see for yourself soon enough the difference between the two states of mind.

In the next article I will cover some of the gains to be had from implementing KPIs.

TOM GRIMSHAW