The 10 Biggest Mistakes People Make Managing Organisational Performance

Writen by Stacey Barr

mistake #1: rely just on financial statements

Profit and loss, revenue and expenses these are measures of important things to a business. But they are information that is too little and too late. Too little in the sense that other results matter too, such as customer satisfaction, customer loyalty, customer advocacy. Too late in the sense that by the time you see bad results, the damage is already done. Wouldn't it be better to know that profit was likely to fall before it actually did fall, and in time to prevent it from falling?

mistake #2: look only at this month, last month, year to date

Most financial performance reports summarise your financial results in four values: 1) actual this month; 2) actual last month; 3) % variance between them; and 4) year to date. Even if you are measuring and monitoring non-financial results, you may still be using this format. It encourages you to react to % variances (differences between this month and last month) which suggest performance has declined such as any % variation greater than 5 or 10 percent (usually arbitrarily set). Do you honestly expect the % variance to always show improvement? And if it doesn't, does that really mean things have gotten bad and you have to fix them? What about the natural and unavoidable variation that affects everything, the fact that no two things are ever exactly alike? Relying on % variations runs a great risk that you are reacting to problems that aren't really there, or not reacting to problems which are really there that you didn't see. Wouldn't you rather have your reports reliably tell you when there really was a problem that needed your attention, instead of wasting your time and effort chasing every single variation?

mistake #3: set goals without ways to measure and monitor them

Business planning is a process that is well established in most organisations, which means they generally have a set of goals or objectives (sometimes cascaded down through the different management levels of the organisation). What is interesting though, is that the majority of these goals or objectives are not measured well. Where measures have been nominated for them, they are usually something like this: Implement a customer relationship management system into the organisation by June 2006 (for a goal of improving customer loyalty) This is not a measure at all it is an activity. Measures are ongoing feedback of the degree to which something is happening. If this goal were measured well, the measure would be evidence of how much customer loyalty the organisation had, such as tracking repeat business from customers. How will you know if your goals, the changes you want to make in your organisation, are really happening, and that you are not wasting your valuable effort and money, without real feedback?

mistake #4: use brainstorming (or other poor methods) to select measures

Brainstorming, looking at available data, or adopting other organisations' measures are many of the reasons why we end up with measures that aren't useful and usable. Brainstorming produces too much information and therefore too many measures, it rarely encourages a strong enough focus on the specific goal to be measured, everyone's understanding of the goal is not sufficiently tested, and the bigger picture is not taken into account (such as unintended consequences, relationships to other objectives/goals). Looking at available data means that important and valuable new data will never be identified and collected, and organisational improvement is constrained by the knowledge you already have. Adopting other organisations' measures, or industry accepted measures, is like adopting their goals, and ignoring the unique strategic direction that sets your organisation apart from the pack. Wouldn't you rather know that the measures you select are the most useful and feasible evidence of your organisation's goals?

mistake #5: rely on scorecard technology as the performance measure fix

You can (and maybe you did) spend millions of dollars on technology to solve your performance measurement problems. The business intelligence, data mining and 'scorecarding' software available today promises many things like comprehensive business intelligence reporting, award-winning data visualization, and balanced scorecard and scorecarding and an information flow that transcends organizational silos, diverse computing platforms and niche tools .. and delivers access to the insights that drive shareholder value. Wow! But there's a problem lurking in the shadows of these promises. You still need to be able to clearly articulate what you want to know, what you want to measure and what kinds of signals you need those measures to flag for you. The software is amazing at automating the reporting of the measures to you, but it just won't do the thinking about what it should report to you.

mistake #6: use tables, instead of graphs, to report performance

Tables are a very common way to present performance measures, no doubt in part a legacy from the original financial reports that management accountants provided (and still provide today) to decision makers. They are familiar, but they are ineffective. Tables encourage you to focus on the points of data, which is the same as not seeing the forest for the trees. As a manager, you aren't just managing performance today or this month. You are managing performance over the medium to long term. And the power to do that well comes from focusing on the patterns in your data, not the points of data themselves. Patterns like gradual changes over time, sudden shifts or abrupt changes through time, events that stand apart from the normal pattern of variation in performance. And graphs are the best way to display patterns.

mistake #7: fail to identify how performance measures relate to one other

A group of decision makers sit around the meeting room table and one by one they go over the performance measure results. They look at the result, decide if it is good or bad, agree on an action to take, then move on to the next measure. They might as well be having a series of independent discussions, one for each measure. Performance measures might track different parts of the organisation, but because organisations are systems made up of lots of different but very inter-related parts, the measures must be inter-related too. One measure cannot be improved without affecting or changing another area of the organisation. Without knowing how measures relate to one another and using this knowledge to interpret measure results, decision makers will fail to find the real, fundamental causes of performance results.

mistake #8: exclude staff from performance analysis and improvement

One of the main reasons that staff get cynical about collecting performance data is that they never see any value come from that data. Managers more often than not will sit in their meeting rooms and come up with measures they want and then delegate the job of bringing those measures to life to staff. Staff who weren't involved in the discussion to design those measures, weren't able to get a deeper understanding of why those measures matter, what they really mean, how they will be used, weren't able to contribute their knowledge about the best types of data to use or the availability and integrity of the data required. And usually the same staff producing the measures don't ever get to see how the managers use those measures and what decisions come from them. When people aren't part of the design process of measures, they find it near impossible to feel a sense of ownership of the process to bring those measures to life. When people don't get feedback about how the measures are used, they can do little more than believe they wasted their time and energy.

mistake #9: collect too much useless data, and not enough relevant data

Data collection is certainly a cost. If it isn't consuming the time of people employed to get the work done, then it is some kind of technological system consuming money. And data is also an asset, part of the structural foundation of organisational knowledge. But too many organisations haven't made the link between the knowledge they need to have and the data they actually collect. They collect data because it has always been collected, or because other organisations collect the same data, or because it is easy to collect, of because someone once needed it for a one-off analysis and so they might as well keep collecting it in case it is needed again. They are overloaded with data, they don't have the data they really need and they are exhausted and cannot cope with the idea of collecting any more data. Performance measures that are well designed are an essential part of streamlining the scope of data collected by your organisation, by linking the knowledge your organisation needs with the data it ought to be collecting.

mistake #10: use performance measures to reward and punish people

One practice that a lot of organisations are still doing is using performance measures as the basis for rewarding and punishing people. They are failing to support culture of learning by not tolerating mistakes and focusing on failure. It is very rare that a single person can have complete control over any single area of performance. In organisations of more than 5 or 6 people, the results are undeniably a team's product, not an individual's product. When people are judged by performance measures, they will do what they can to reduce the risk to them of embarrassment, missing a promotion, being disciplined or even given the sack. They will modify or distort the data, they will report the measures in a way that shows a more favourable result (yes – you can lie with statistics), they will not learn about what really drives organisational performance and they will not know how to best invest the organisation's resources to get the best improvements in performance.

Stacey Barr is a specialist in organisational performance measurement, helping people get the kind of information that tells them how well their business is doing and how to make it do better. Sign up for Stacey's FREE newsletter at http://www.staceybar.com

10 Super Charged Ways To Spark Your Sales

Writen by Rojo Sunsen

1. Add a free interactive game to your web site. You could hire someone to create it. The game should be related to the theme of your web site.

2. Train your employees as a team instead of just individuals. Everyone must do their job in order for the others do theirs.

3. Make people feel like it's their idea to buy, they will be less hesitant. Tell them in your ad "You're making a smart decision for buying our product".

4. Promote yourself as well as your products. Write articles, ebooks, reports, etc. When you endorse products, people will think your statement is credible.

5. Show your prospects a group of testimonials that stand up for your product. People are more likely to agree with a group than have a different opinion.

6. Maximize your advertising budget and don't go broke like the big web sites. All you need is a small group of loyal customers to sell back end products.

7. Sell to the people that join your affiliate program. They are more likely to by your products because they are interested in selling them for commission.

8. Offer a deluxe product or service as an up sell or back end product. You won't have to create a totally new product just add on to your main one.

9. Tell people what they're thinking and feeling as they read your ad. Most people will actually do it. Your statements should help sell your product.

10. Make your product offer very rare. People perceive things that are rare as being more valuable. You could use a limited time offer or free bonuses.

About the author:

Rojo Sunsen is a specialized bounty hunter who prefers to work quietly/confidentially for the benefit of her clients.

7 Hot Home Business Ideas

Writen by Stephanie Chandler

1. Virtual Assistant – Virtual Assistants provide administrative services to small businesses that don't have a staff to handle these duties. VAs can perform a variety of tasks for clients including contact database management, writing and sending business letters, designing brochures, and creating newsletters.

2. After School Care – Instead of operating a full-time daycare service, offer before and after school care. Many parents would rather pay to have someone watch their kids for a couple of hours each day and avoid turning them into latch key kids.

3. Computer Tutor – Computer tutors teach students how to navigate the internet, access email, set up a new computer, and use programs like Word, Excel, PowerPoint, and Quickbooks. These services can be delivered one on one or in classes held at local adult learning campuses, retirement centers, and churches. Tutors can charge by the hour or a fee for class registration.

4. Freelance Writer – Freelance writers write articles for newspapers and magazines or copy for businesses. Most articles require research and must be well-written and suited to the style of the publication. Publications typically pay $.10 - $2.00 per word. Businesses also contract writers to create reports, press releases, advertising copy and other special projects.

5. Pet Sitter – Pet sitters provide in-home pet care while pet owners are on vacation. Services offered typically include feeding and playing with the animals, yard or litter box cleanup, dog walking, and even plant watering, newspaper & mail gathering, and rotating lights. Pet sitters usually charge a fee per visit and charge extra to care for additional pets.

6. Ebay Trading Assistant – Trading assistants act as sales brokers for eBay by contracting with clients to list items for sale, collect fees from buyers, ship the items and then take a percentage of the profits—usually between 30-50%. This is an excellent service to offer people who are not computer savvy yet have items they would like to sell online.

7. Homemade Crafter – Crafters who create quality goods such as knitted items, wooden wares, ornaments, clothing, home décor, and even baked goods can sell their products for a profit. Crafts can be sold at flea markets, street fairs, trade shows, in-home parties, community events, or through a website.

Stephanie Chandler is the author of "The Business Startup Checklist and Planning Guide: Seize Your Entrepreneurial Dreams!" and founder of http://www.BusinessInfoGuide.com, a directory of resources for entrepreneurs. Subscribe to the newsletter for hot tips and small business tools by sending an e-mail to Newsletter@BusinessInfoGuide.com.

The 7 Keys To Business Success

Writen by Greg Roworth

Do you run a business that seems to run you? It does not have to be this way. There are 7 keys that can improve your business results and help you achieve success with much less stress.

1 Take Charge

The first key is to realise that success will not just happen, it is up to you to make it happen. Successful people claim to be in control. They refuse to be victims. They accept responsibility for the results their business achieves and take the blame themselves if things go wrong. When we are in control we can choose what to do. We can't always control the situation but there are two things we can control – our attitude and our skills. We can get stronger, we can get smarter, we can get better at all the skills we need to run our business. We can take charge of ourselves and our business and change the results we are achieving.

2 Know Where You Are Going

Without having specific goals, business owners often find working in the business becomes an endless drudgery. If being in business is not exciting, enjoyable and rewarding, then why be in it? It is exciting and rewarding for the few who are really successful. The difference is that they have a clear idea of where they are going and each day they can see their business making progress towards their clearly defined goals.

If our goals are not clearly defined it is easy to become like the mouse on the treadmill. We can expend a lot of effort going nowhere. All we can do is react to the pressures the business creates. The second key is to decide where you are going. When you know where you want your business to go, you can determine what needs to be done to get there. Doing these things creates excitement and enjoyment. Instead of struggling on with meagre rewards, we can make progress towards success in a steadily growing and entirely planned way.

3 Spread The Word

You will never succeed by keeping your business a secret. You need to spread the word to let people know about your unique products or services. With many small businesses, there is a tendency to be reactive. If sales slow down, you decide to advertise to address the situation. When work picks up, advertising is stopped. The result of this approach is haphazard advertising which produces haphazard results. Rather than haphazard advertising, a planned advertising and promotion strategy can be applied to address specific goals.

Instead of one broad objective of "getting more sales", strategies can be developed in three areas. Firstly strategies should be developed to actively encourage word of mouth and a system for generating referred leads. Secondly, planned advertising approaches are needed to generate a steady flow of new enquiries. Thirdly, strategies can be developed to increase the value and frequency of purchases from existing customers. Marketing must not be left to chance. The third key is to spread the word, by developing planned, consistent and effective advertising and promotional systems and strategies.

4 Do What You Do So Well They'll Come Back And Bring Their Friends

The difference between the truly successful business and the average business is that successful business' leaders live, breathe and preach quality, where the average business' leader only pays lip service to it. There are many companies that have built their reputation on the quality of the service they provide as much as the product they sell. Even if we haven't been, I'm sure we all know the reputation Disneyland has for the quality of the experience of a visit there. The title of this key is a quote (paraphrased) from Walt Disney. This man lived and breathed this attitude and accepted nothing less from his employees. The outworking is that standards and procedures are established so that employees know what is expected of them in every situation, particularly in an interaction with a customer. Delighted customers come back with their friends.

5 Train Your People To Do It Better Than You

When we start a business based on our own unique skills, we have a difficult choice when we get too busy to cope with all the work our expertise has created. We need to spread the load by employing others to do some of the work. This is the critical point in the business' development. If the business owner gets this right, the future of the business is assured, but if it goes wrong, the business is doomed.

Many business owners wish they could clone themselves. They are unable to find anyone who can work as well as they do. Usually there has been some resistance to this move, but eventually the need becomes obvious. Business growth is always stifled by the owner hanging on to the work they enjoy. Having made the choice to grow, the key to unlocking this potential is to train the new people to be better than yourself.

6 Keep The Score

The greatest danger in a growing business is for the owner to lose control. This fear causes many to choose to stay small because they do not want the worries of growing too big.

WHAT YOU MEASURE YOU CAN IMPROVE!

A business' performance needs to be managed and controlled. So many business owners worry about getting the work done, but they don't measure results, they don't keep score. Keeping the score indicates how well the business is going towards achieving its goals. If performance is behind expectations, steps can be taken to improve. If the score was not kept, no one would ever know that performance was substandard, and the goals would quite likely never be reached.

7 Celebrate Your Victories

Regeneration of our physical and emotional resources comes when we celebrate victories. One of the problems we have in small business is that we think we are too busy to take time off to celebrate. Even if we just get away from the business and relax, we come back rejuvenated and are usually able to tackle our work with a renewed vigour. Imagine how inefficient it becomes, using a battery powered machine, if we keep on working harder and harder to get the work done and never stop to recharge the batteries. If we don't stop at times to recharge our batteries we keep working hard but become totally ineffective.

When we plan our future and set goals it is easy to determine when to celebrate. Without goals to achieve, we can keep on working until it becomes a drudgery. Celebrations put excitement into what we do.

Conclusion

Implementing the 7 keys to unlock the profit potential in your business could be what you need to end the frustration you feel from trying to build your business but seeming to take one step forward and two steps back. These are the keys to freedom from the daily grind of business pressure, the keys to gaining the rewards you deserve from the efforts you put in. It is up to you to take hold of the keys and unlock the hidden profit and excitement that is the potential your business holds.

© 2003 Greg Roworth, Progressive Business Solutions Limited.

Greg Roworth is a business consultant and author of "The 7 Keys to Unlock Your Business Profit Potential." With over 25 years practical experience in business ownership and management, Greg has, over the last 12 years, worked with hundreds of small and medium size enterprises, assisting the owners to grow their business profitably and at the same time reduce their stress levels. His successful business development program results in development of a business that works so well that the owner doesn't have to.

Buy "The 7 Keys" book online at http://www.progressivebusinesssolutions.co.nz or check out the list of free resources and quality business building articles on our Free Resources page.

Top 7 Tips To Beating The Bureaucracy In Business

Writen by Lance Winslow

If you own a business then surely you realize that there are so many ridiculous rules and regulations to business that it is difficult to turn a profit. These issues have caused more business failures in the United States than any other reason. Some say the number one reason of business failure is under-capitalization.

True, but the reason businesses are under-capitalized is that they under-estimate all the costs associated with all the bizarre and often laughable (cry-able) regulations. The government is the number one cause of business failure in the United States and there are hundreds of thousands of case studies, so that point cannot be debated in any forum poised at telling the truth. Here are some top tips in beating the bureaucracy game in business.

1.) Know all the rules in advance before you start.

2.) Know the all the costs in complying with all the rules in advance.

3.) Know, which rules are never enforced unless your competitor turns you in.

4.) Know how vindictive and dirty your competitors are and how often they file false complaints with government agencies.

5.) Know, which politicians are on the take and which of your competitors give them money.

6.) Know the laws yourself and do not solely rely on professional parasites or lawyiars who may have hijacked the law and secretly make these laws unavailable to business owners to hold them out for ransom fees.

7.) Know how to stroke government bureaucrats and tell them they are great and above all respect their fiefdoms as that is all they have in the whole wide world.

Those are the top 7 ways to protect your business from the blob of bureaucracy. You must make business decisions based on profits and customers not on bureaucracy, but you must know what you are up against so ditch the MBA know-it-all attitude for bit and go study up on the blob and all the laws of unintended consequences it creates. Consider all this in 2006.

Lance Winslow - Online Think Tank forum board. If you have innovative thoughts and unique perspectives, come think with Lance; www.WorldThinkTank.net/wttbbs/