- If you want to manage productivity well, you first need to measure it well and let your team know how you’re measuring it
- Every organisation, whatever its size, has plenty happening by the hour, week or year – customers seen, calls taken, transactions made, incidents attended, press releases written, widgets produced – so which are the most important areas to measure and how to measure them?
- At present, many managers suffer ‘information overload’ – they also have important ‘information gaps’ so a lot end up focussing too much on one area, say quality, and ignoring others like cost
- After their recall of nearly 10 million vehicles, most due to ‘unintended acceleration’ troubles, Akio Toyoda, president of Toyota, commented “some executives just got too big headed and focussed too excessively on profit – what suffered was the reliability and quality of Toyota’s cars – a reputation that took years to build but only days to unravel”
- Managers at all levels thus need a set of productivity measures which covers all areas where it is most important that an organisation performs well – a set which prevents them ignoring any one
- These measures are the cardinal measures, equivalent to cardinal buoys for skippers when sailing a boat from A to B
- Cardinal measures are the messengers of good or bad news:
- They ring alarm bells when major dangers, or opportunities, approach
- They highlight where improvement is needed, albeit not how to improve
- Once a cardinal measure has raised an alarm, the manager responsible must drill down to measures below it to find possible causes of why things have gone wrong, or unexpectedly right, and decide what action to take
- Jack Welch, ex CEO of GE, said “managers need something that lets them move faster, communicate more clearly and involve everyone in a focussed effort to serve ever more demanding customers”
- Paul Rogers of Bains rightly said “good companies concentrate on the stuff that really matters – and, when they make decisions, they get it right more often than they get it wrong – less successful companies take too long to make up their minds, and decisions are made by the wrong people in the wrong part of the organisation or based on the wrong information”
- A set of cardinal measures provides the answer for most managers