Processes & Management Team

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A functionally organized and accountable management team should be established early on to build a successful business. That means assigning responsibility and accountability with clear goals and metrics for determining performance. It also means that each management team member is held responsible for meeting their performance metric. 

Choosing the right metrics or Key Performance Indicators is fundamental to the success of your management team. Striving to meet the performance dictated by the wrong metrics can be damaging to the business.  For example, a salesperson that is measured solely by revenue might achieve the revenue goal by offering special discounts to customers. The resulting impact on gross margin could be devastating for the business, putting it in a position of needing to build products or provide services without enough cash flow to pay for those products or services. In another example, production might be negatively affected if performance is measured solely on volume of widgets produced, while ignoring yields or defect rates - and all too often there is no budget allowance to cover this.   

Take the time to choose the right metrics to achieve the desired results and set up clear and concise communication of those metrics to the team and provide the tools to watch the performance in real time. It doesn’t help to find out when it's too late to take corrective measures that you are off track to meet the goal. We recommend reviewing metrics at least weekly as a team, so that everyone shares in the results – good and bad. 

Many issues can be managed and controlled by establishing repeatable and scalable processes or procedures for getting things done. Break complex tasks into smaller, simple tasks. Document everything so that someone unfamiliar with the process can step in and do things properly, just by following the written procedure. This will go a long way to eliminating errors, increasing efficiency, and adding to profitability. 

Often this is difficult for a business owner because they are too close to the process, or the people involved. This is where an outside perspective can be invaluable.