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Joe Klocko: Employee-focused metrics improves every business

Posted: August 8, 2012 2:00 a.m.
Updated: August 8, 2012 2:00 a.m.
 

What are the key metrics that you use to manage your business? Undoubtedly, they include the “big three,” which are sales, profit and cash flow. After that, there’s a lot more variability than you might imagine. Especially when moving between industries such as consumer products versus durable goods and manufacturing versus service.

Many companies use metrics like inventory turns, accounts receivable collection days, percent of spare orders shipped the same day received. I have seen key operating statistics reports from companies that included nearly 30 metrics.


With all those metrics, and with almost perfect 20/20 hindsight on my part, I can now say for certain that there are other, equally important, metrics that were not being gathered and managed. In a world that bandies about statements such as “You are what you measure” and “Our people are our most important asset,” the key operating statistics for most companies are shockingly devoid of any metrics about the mindset and welfare of their self-proclaimed most important asset — their team members.


Perhaps some managers don’t really believe in proactively motivating their team members to high levels of performance and prefer to use the stick versus the carrot approach.


However, the vast majority of the managers and executives I have worked with over the years truly believe in the power of positive motivation. Yet they have somehow failed to incorporate employee-focused metrics into those they use to manage the organization.


I’m not talking about some sophisticated survey of the employee base that takes a lot of time and costs a lot to properly design and execute. In fact, most of the data you need to begin incorporating employee-oriented metrics into your management reporting process are readily available in your finance and human resources functions. Tap into these resources to start managing how your company’s practices impact how employees feel about the company. When you start asking why your metrics are not at the desired level, you will be on your way to changing those metrics in a positive way.


Here are a few for you to consider as you start the journey:
n Employee turnover — Is your turnover rate better or worse than businesses in similar industries? Turnover is best measured when broken down by types of positions (i.e. individual contributor, supervisor/manager and senior executive).


n Quick turnover cost — The cumulative cost of wages and benefits for employees who leave the company within six months of their start date. These costs are largely lost to the company’s bottom line because employee productivity is dramatically low during the first several months on a new job.


n Safety — Two classic safety metrics are Lost Workday Injury Rate and Total Injury Rate. Safety is a win-win for employers and employees and great companies with world-class safety metrics send a strong message to their employees that they care about their health and welfare. Many successful companies prominently manage by the core values of safety, health and respect for people.


n Position fill times — Average time required to fill an open position. This leading, versus lagging, metric can indicate your company’s reputation in the local job market and is also best used if broken down by types of position.


There is a wealth of information available in the public domain to help you incorporate employee oriented metrics into your management processes and reporting. So continue to manage by the numbers — all the numbers — if you want your company to prosper and grow.


Joe Klocko is the director of the Centers for Applied Competitive Technologies hosted by College of the Canyons. Mr. Klocko’s column reflects his own views and not necessarily those of The Signal. For more information about how the college’s CACT and Employee Training Institute can help your business, please call 661-362-3112, email cact@canyons.edu or visit www.canyonsecondev.org.

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