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Performance MetricsWork not measured cannot be managed
The most significant shortcoming of many family owned businesses is the LACK of performance metrics. Since performance metrics form the basis of integrated work management systems that routinely reduce labor costs by 20-30 percent, their omission can be quite costly. Without adequate standards of performance, "running" the business successfully can become so time consuming that the family life is eroded, one of the most common maladies confronting family businesses. The lack of performance metrics and formalized "performance standards" in family-owned businesses is not a new problem,. but it has become more critical. Indeed, it is a survival issue for maintaining the viability and vitality of every family-owned business. Businesses can be run without performance metrics, but only by "long hours and hard work." As noted by Dr. James Crupi that work ethic has been dramatically and forever changed. The success of a business now depends on a different type of work ethic, one based on "intellect." As Dr. Crupi stated, "If I can out think you, I can out work you". That change in the work ethic is anchored by computers that not only accumulate and process information, but have created a new and compelling sense of urgency: the "pace" of doing business has increased geometrically. Executives graduated from business schools over the past twenty years have been trained to manage by assessing a business in terms of performance metrics. But how effective are these management professionals in a business environment lacking these work management tools? How effective would physicians be in providing patient care if they lacked access to lab tests, x-rays and other tools for diagnosis. What if they had to "guess" the patient's vital signs?
To develop the performance metrics and to develop the performance standards necessary to keep your business healthy requires that the major work functions in every department be identified as to volume and it must relate to time. Most simply stated, WORK NOT MEASURED CANNOT BE MANAGED. To underscore this crucial issue, pose this exercise to your senior managers at your next management meeting: "Take the next fifteen minutes and write down the following information for each department or work unit that reports to you:
Ironically, successful family businesses are coping with the demands of the future not with new or more sophisticated theories of management. but by getting back to the basics. They are returning to those ingredients that made the business successful in the first place; QUALITY, SERVICE and EFFICIENCY. All three can be achieved simultaneously only by establishing performance standards and using performance metrics to ensure the standards are being met. Check out our Human Resource Forms section for a complete selection of all the HR forms you'll need.
Work not measured cannot be managed.
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