Why measure current business performance levels?
In this post, I’m discussing the importance of understanding and measuring current business performance levels. As a business leader faced with a situation that requires substantial improvement, it’s easy to jump straight to solution mode, rationalising you don’t have time or resources for measuring the ‘As Is’. However, this post explains why you don’t have time not to measure current state business performance levels.
Measuring current business performance is the first stage for checking performance against business goals at all levels of an organisation. Whenever an organisation needs to measure performance, the first step should be to compare daily, weekly or monthly performance results against the longer-term, strategic objectives. I wrote about the need for aligning performance measures at all levels here.
So why does current performance matter?
Organisations often set goals and targets, without understanding their current performance levels or their customer demand. As a business leader therefore, you may not know whether your team has the skills and resources to achieve your customer requirement. In other words, there is a risk you don’t know the size of the performance gap. As a result:
- Employees are given targets which are either too easy or too difficult to achieve
- They are not appropriately challenged, so motivation levels start to fall
- Communication and trust issues follow
- Productivity falls, and the performance gap widens.
The objective of measuring current performance is to understand whether the current resources and skill levels can do what’s needed to match customer demand in the time required. Sometimes, called baselining, it’s an important stage before setting indicative measures – or KPIs – that measure whether you are on track to meet your overall business goals.
Not only does baselining prevent unanticipated surprises at year-end, measuring current performance also means that improvements on the baseline can be measured. A clear performance challenge can motivate staff to achieve. Improvements can be converted to monetary benefits if the right measures are selected.
How to measure current performance
Measuring performance for improvement can be challenging for both leaders and teams. It may be very different from how you are used to operating, both technically and culturally. It often requires new approaches, interpersonal skills, visual tools, difficult conversations, and persuasiveness to initiate measuring performance.
As a business leader, once you have acquired the mindset and skills, you should then create the right environment for your teams:
- Measuring current performance can be a difficult subject, and needs to be handled sensitively
- Reassure people you are looking at system and process errors, not at personal performance
- Create an open and honest environment to ensure performance measures aren’t manipulated
- If individual performance issues come to light, hold private coaching sessions with the people involved
- Aim for staff to measure their own performance levels, honestly without fear of recrimination.
What to measure
Next, it’s vital to measure the right things:
- These baseline measures are required to help you set realistic and achievable measures for the improvement activity you are undertaking
- They are not necessarily KPIs, (like productivity, quality, or cost) which tend to be used when things are in steady state
- Measures may include skill levels, or people engagement results, which support the KPI or the business goal. See my earlier blog for more on this.
What the measures tell you
You will get an understanding of the performance gap, and what you need to do to achieve your long-term business goals. This information is crucial to identify:
- whether you need to improve
- whether you need to rebalance resources or work (if over-achieving, for example)
- how much you need to lift performance, month by month to reach your goals.
Some of the things you will need to focus on include:
- How can opportunities to improve – or problems – be identified and prioritised for action?
- How much effort do you need to make to achieve your goals?
- What does this effort look like?
- Improvement teams?
- An operator training programme?
- A recruitment exercise?
- Or staff engagement and communication activity?
- What will this effort cost?
In conclusion, the first stage of business improvement should be to measure the existing business performance
How we can help
We can develop a programme of on-site activity or workshops to help you measure your current performance. This would take between two and five half day sessions, at fortnightly intervals, leaving time for you to gather and analyse data between sessions.
We have a range of business improvement tools to help measure performance, including:
- Brainstorming & facilitated discussions
- Timing exercises
- Data analysis
- Skills matrix
- Engagement tools
Here is a comprehensive article on measuring performance. it includes a historical and forward look. An extensive survey of indicates varying levels of understanding and insights around how to measure performance for business improvement. It is often seen as something to report to senior leaders.
About Lose the Box
Maureen Whyman is the owner of Lose the Box, a Business Improvement consultancy based in Notingham, the East Midlands. We blend simple science with creative facilitation, inspiring leaders, managers and teams to work more collaboratively and productively together.
Our unique approach generates confidence and commitment to change and transformation. As success grows, organisations achieve long-lasting improvement, strengthening well-being, skills, and processes for their clients. See testimonials here.
Please contact us on 07824 660 120 or email@example.com for a no-obligation discussion if you think we could be of assistance.
Follow us on Twitter and Facebook @losethebox.