The simply answer: Determine what are the most valuable products you produce in each different functional area (let’s call them Divisions) of your company. For HR it might be “Productive Staff, Marketing might be “Qualified Leads turned over to Sales”, Sales is easy – “$ Value of Sales”, Accounting could be “Amount of Reserves”, Production is whatever you produce so let’s say in a widget factory you produce “Widgets”. In your QC area maybe “widgets produced to industry standards” and your New Business Division might have “New Customers”. You work it out for your own business,  what it is you want each of your Divisions to produce as its valuable final product.

Now all you need to do is put a quantitive measurement in front of each valuable final product. Examples: # of Productive Staff or # of Qualified Leads turned over to Sales etc.  Next, you get a weekly report from each of your Divisions giving you the amount of valuable final products that were produced. Now you have the metrics with which to measure the production of your company and just as importantly, to manage it. 

You have to clearly and specifically define each metric. What is a New Customer, for example? It could be defined as a customer who made his first purchase with your company.  Your staff have to understand what the product entails, so be really clear on what you are designating as a New Customer. 

Next, track your Divisional production by placing the amount of production on a piece of graph paper. You can find graph paper online and there are also fancy electronic versions – either one is fine.   

You scale the graph paper by putting the quantities along the left side and the days, weeks or months on the bottom – depending on what time segment you are managing by. 

Metrics can be tracked daily, monthly, quarterly, yearly and by any time frame at all. An individual uses a short time frame, daily, but also uses longer time frames so he can see how well he’s doing over longer periods.  Management concerns itself with weekly and longer periods. Corporate generally uses quarterly and yearly periods.

With this you can create your own business metrics; now you can start managing by statistics and there is a way to do it. 

Using management by metrics is a vital tool to guide you through the rough spots and to manage your expansion. With practice, you’ll get good at it. 

– Ron Norton 

Copyright © 2019 by Ronald C. Norton