Measurement as Support
You can’t quantify improvement if you don’t use measurement as a tool. You also can’t improve performance if you set the wrong metrics to start with. How you measure is as important as what you measure.
Watch Digging Deeper this week as Dennis talks about the importance of implementing the right KPIs and reviewing them frequently to help guide your decisions. We look forward to hearing your thoughts and comments.
Invest in your high potential employees today by enrolling them in FBI’s Contractor Business Boot Camp. Our next class starts on April 15. Please contact Charlotte at [email protected] to learn more.
Hello everybody. Welcome back to Digging Deeper, our series where we delve into some construction issues, hopefully
give you some tips that you can take with you. As always, please give us your comments, any suggestions for future blogs,
et cetera.
Today I want to talk about measuring as a support system. In business, we measure lots of things and those measurements
can be very important to keeping our business on the right track, making sure we're addressing the things we need to be
addressing and really succeeding. But oftentimes, from an employee standpoint, some of those measurements can come
down as a big brotherish, we're monitoring their performance and we're assessing their performance. Depending how
you utilize your bonuses and review systems, those can come across as negatives. Sometimes the measurements that the
company applies end up with consequences, those consequences being maybe bad attitudes or negative feelings or even
lack of confidence to go out and do their jobs.
Just to give you a couple examples of this. Many years ago, we had a client who started a new office, and they had set
some goals for that new office. As they got down the road, they were measuring that office's bottom line by allocating
overhead, both of course the overhead that applied to that particular location but also company overhead, and they were
allocating it on the basis of revenue. Well, that particular market offered the opportunity, let's just say, for slightly lower
gross profit margins. So, when you allocated overhead in that manner, it looked like that operation was a losing operation
as opposed to a winning operation. Looking at those measurements, the group up there had some negative influence, I
would say, on their morale overall and probably even affected the conversations between headquarters and that location.
If you really cut back to the original goals of that location, they actually were meeting the goals of that location and were
performing really quite well for a startup in that market and they were contributing profit to the organization. But
somehow the conversation got lost because of the method of measurement and the way those measurements were used.
If you think about the things that you are measuring, for example, you might be measuring production rates for your
estimating group or your business development group, you might be measuring hit rates for your PMs, you might be
measuring their revenue per PM or profit per PM, things like that. Those can all be very positives, very much positives.
They can give you information to double check your strategy, improve your strategy, manage people's workloads, assess
your effectiveness. If you use measurement as a support system, you can give the employees information with which to
better themselves, better their performance, do better for you and for themselves. But if those measurements come
across too critical or too evaluative, they can also have negatives.
Just think about the things that you as a business are measuring and how are you using those measurements. Are you
using them for good to motivate people to do better and to understand, again, the strategies or the possibilities for
improvement, or are they being used more as that stick and they're actually providing negative consequences for your
organization? Again, Dennis Engelbrecht, Digging Deeper. Thanks for tuning in.
