Measuring Change: Just Do It

Posted by Greg Bustin (December 1, 2004)

You must measure the actions of your company and its employees. After all, what gets measured is what gets done.

The discipline of measuring performance can mark the difference between good companies and great companies. Measurement is the process by which real change takes effect, reaches its full potential and becomes institutionalized within an organization.

Are we making less progress than we expected?
Do countless strategy and financial meetings continue to litter your calendar without result?
Are deadlines pushed back time and time again?
Could your employees be better focused on the company’s overall goals and objectives?

If you answered “yes” to any of these questions, you’re not alone. Most companies have these problems occasionally, if not chronically. So how do you turn procrastination, conflicting priorities or even ambiguity into timely, specific, sustainable results with the power to deliver bottom-line impact? By implementing a measurement process that will:

Bring clarity, documentation, deadlines and accountability
Help deliver customer satisfaction and career growth for employees
Help drive sustained profitability for your organization

The 200-year-old origin of measurement

Measurement – rigorous measurement – is hardly a new concept. In 1809, German mathematician Johann Carl Friederich Gauss published a study that brought a new level of rigor to predicting and measuring the “normal distribution” of errors. Many trace the origins of modern measurement to Gauss, and we recognize one aspect of his measurement tool as the “bell curve” that plots the probable occurrence of variation of the desired outcome.

Building on this model, Motorola engineers in the mid-1980s coined the term Six Sigma to describe variation from the mean (i.e., three sigma – “sigma” being the Greek letter to designate standard deviation – on either side of the mean) where process improvement is required.

Larry Bossidy at Allied Signal and Jack Welch at GE popularized the process, using it as a lever to change the culture – not just the performance – of their respective organizations.

Any effective measurement tool will help you drill down to get the right answer – not just any answer – to such questions as:

Have you assigned tangible measures to your most intangible organizational goals?
Are your improvement initiatives linked to you most strategic issues?
Are you tracking results?
Are you receiving the return on investment for your initiatives that you expect?

Be warned. Measurement tools – virtually any meaningful measurement tools – are rarely quick fixes. And they are not for the faint of heart. Implementing measurement systems requires patience, discipline, lots of communication and the willingness to change habits, customs and expectations.

While most measurement initiatives begin by seeking ways to wring excess costs out of an organization, it’s important to note that a good measurement system can also help you increase revenue by identifying (or confirming) and then producing more effectively what your customers say they want.

Having identified your organization’s so-called “value drivers,” eliminated non-essential steps and undertaken new processes that capitalize on your learning, the trick is to track, record and sustain results.

In my book, I examine six components necessary for implementing and measuring the kind of change that produces bottom-line impact. Here’s the first one:

Align interests

Once you have established, written down and communicated overall objectives, your departments and business units should develop specific objectives that support those overall objectives. It follows that employees should next develop their performance objectives in direct support of their supervisor or team leader’s goals, creating a cascading effect that reaches down to the lowest level of the organization.

When Larry Wheeler was hired in 1997 to run Mrs Baird’s Bakeries, sales were not the problem.

Wheeler quickly implemented a series of controls, checks and measures to fix things on the earnings side rather than the sales side of the $300 million operation. Our firm worked with Wheeler and his team on a variety of initiatives, including restructuring, rationalizing and repositioning certain products within the company’s overall portfolio. Wheeler’s realignment of interest to maintain sales while improving profitability helped the company to quadruple its operating profit before selling in 1998 to Grupo Bimbo, Mexico’s largest food company. To sustain success, it’s critical that everyone agrees on what projects to tackle, what resources to allocate to complete the projects, and how to measure performance.

Achieving alignment and following the other five components of an effective measurement system will not guarantee that any changes you’ve made will succeed in the short term or even over a sustained period. But following these guidelines will improve your odds of success.

Embracing a disciplined approach that rests on a foundation of clarity and is upheld by regular measurement increases significantly the likelihood of two important outcomes. First, shared expectations with your customers will lead to a greater understanding of the value your team brings to their business. Second, satisfied employees with clearly established responsibilities will be more productive and, therefore, more valuable to the organization.

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