Business Metrics need to be shared throughout the organization in order to have true implact.

1. Metrics Should be Everywhere (Part 1)
by R. Thomas Stocker
Everyone uses metrics. You, your condition of these five categories of metrics.
management team and your employees. They are:
(Yes, even your employees at the lowest
• Customer – “on time and complete” is
level). But many in management don’t
the most common and important
realize it or believe it. Some folks really
measure. Some also break this metric
don’t think much about metrics, or only
down to complete, on-time or some
equate them to financial indicators. But
other variant. I like to keep it simple to
non-financial metrics can be more effective
understand. Did I give the customer
and powerful than the financial scorecard. I
everything they wanted when they
don’t mean to minimize the importance of
wanted it? This is one of the most
financial metrics. At the end of the day they
important indicators as it touches the
are the ultimate scorecard and measure of
customer directly. It can indicate how
business success. But in many cases, more
well your delivery process is, what your
than you would think, they are useless in
sales force spends their time on
measuring your business’s effectiveness,
(firefighting or selling) and can be a
identifying and correcting problems or
pretty good indicator of how happy your
getting your workforce to help make
customers are (given you ship them
improvements.
quality product with good value and
It is all too common for management to service).
ignore their employees when discussing
metrics. Most consider metrics management • Productivity – includes throughput,
tools and don’t share them with line linearity, efficiency and other measures
workers. Many managers indicate they of work center or company (service or
don’t use non-financial metrics while, in manufacturing) product delivery
fact, they have metrics in use all around effectiveness. Many of these indicators
them. Most think their employees don’t work in concert with each other such as
understand metrics and many don’t think throughput and efficiency. Getting the
about how powerful metrics could be if they right number of product through the
took the time to tailor metrics for their process with the right number of workers
employees to use and understand. is much better (and cheaper) than not
getting enough through the process with
There are five categories of metrics I too much labor.
recommend for all companies, service or
manufacturing to use. In fact, most do use • Inventory – (mostly manufacturing, but
all or most of these categories in some form, can be adopted by service companies.)
and there are countless measures used within The most obvious measures are
each. When used in concert with each other inventory value, turns or days (weeks,
and within a work center or company, you months) on hand. But a more important
can tell how well a center or company is measure is number of inventory outage
doing with a high degree of accuracy. In instances, a very powerful metric and
most cases, the financial results reflect the one that affects every employee in a
10 Larkspur Road, East Greenwich, RI 02818 401-451-9799 www.boardroomadvisorygroup.com

2. profound way. If they don’t have So, how do employees understand these
something they need in order to finish indicators? It depends. Not all categories fit
building or delivering something, they in every operation. And the indicators must
can’t do their job. It is easy to see how be in the form germane to how the employee
the more instances of outages, the more works. If an employee works with units per
out of control the manufacturing process hour, dollars per unit is not a good indicator.
may be and downstream, the potential Likewise, material outages expressed in
for disappointing customers. dollars does nothing for an employee who is
trying to figure out why she always runs out
• Quality – warranty is the first indicator, of bolts. Number of outages would be more
and although after the fact, indicates appropriate.
how often unacceptable product or
Once effective measures are put in place,
service reaches customers. This can also
they must be communicated regularly
indicate whether your sales force is
(daily?) with the workforce. Employee
proactive and out selling or spending
involvement meetings with a focus toward
more time on damage control. Inside
problem solving and reaching daily
quality measures sometimes don’t exist
requirements are a very powerful tool.
and warranty is the only indicator.
Metrics provide the people closest to (doing)
Others have various metrics along the
the work with a tool to see how they are
entire product cycle or at the end. Each
doing against goals, ways to find
has a use and can provide early
suggestions for improvement and the sense
indications of issues, or at least catch
of empowerment they may never have had
problems before the product reaches the
before. In many cases that empowerment
customer.
also increases pride and a sense of
• Employee welfare – indicates how well contribution.
you pay attention to your employees’
No one likes to fail. Human nature is to be
safety and well-being. Common
competitive. Providing your employees
indicators may be reportable accidents,
with a scoreboard will automatically
OSHA incidents or other such safety
increase productivity IF you provide the
measurements. This category is most
proper communication about what you are
common in manufacturing and
measuring, why and the expectations for
distribution operations. A safe and clean
improvement. And yes they do use metrics
environment is key to employees feeling
in their every day lives. They follow sports,
they are an important part of your focus.
gasoline prices, balance checkbooks and
have stock portfolios. They understand.
To comment on this or other topics important to private business owners, access my blog at
www.boardroomadvisorygroup.com.
About the author; Tom is a Principal of Boardroom Advisory Group, LLC, an owner advisory and consulting firm. Tom serves on the Board of
Directors for the RI Economic Development Corp’s Small Business Loan Fund Corporation (SBLFC), the finance arm of the RI EDC. He writes
a monthly article for the RI EDC’s Every Company Counts initiative. His articles focus on areas that can add significant value for business
owners. Contact Tom directly at 401-451-9799 or tstocker@boardroomadvisorygroup.com.
Boardroom Advisory Group, LLC is a business advisory and consulting firm specializing in helping business owners resolve day-to-day systemic
issues that interfere with cash flow and profitability attainment. The Firm works with both growing and underperforming small to mid-market
private companies. The Firm’s team of hands-on senior professionals find and implement solutions to improve top-line and bottom-line growth,
increase cash flow, reduce costs, improve process, structure, and use world-class metrics to keep the business on track. The team also has
extensive experience working with troubled companies through business restructures and recapitalization. Boardroom Advisory Group’s core
focus on developing strategies to drive and measure performance has resulted in a history of sustainable top and bottom line growth, healthy cash
flow and increased company value for their clients. For more information about how we can help you build a more valuable business visit our
website at www.boardroomadvisorygroup.com.

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Additional articles written by Mr. Stocker include:
Start Forecasting Now! Do You Have Contingency Plans?
I’m Out of Compliance. Now What? Have You Thought About Your Future Lately?
Are you in a Foxhole? Metrics Should Be Everywhere (Part I)
Are You an Octopus? Metrics Should Be Everywhere (Part II)
What is Value? It’s All About Growth
These articles can be accessed at www.boardroomadvisorygroup.com/pages/pubs.php. You can also request to be added to his email list to
receive his latest articles on a monthly basis on the Company website. Contact Tom at tstocker@boardroomadvisorygroup.com.