It’s no secret that at Navigate, we love metrics!
Performance metrics are critical for the success of your integration business. Without the ability to measure performance, management cannot be effective. And you can’t determine what constitutes a good performance without having good metrics.
One of the buzzwords we are hearing a lot these days is cascading metrics. What is this about? What does it mean? That is the topic of this week’s video with Brad Malone and David McNutt.
“The concept of cascading metrics is the idea that everybody in the company has metrics, from the top to the bottom,” McNutt explains. “We feel that every person in the company should have two to three metrics that they are responsible for. The cascading means that the metrics at the top have supporting metrics that go all the way down the organization to the last person. When all of these are aligned together, we find that the company’s much more efficient and performs a whole lot better.”
How can you put cascading metrics into practice in your integration business?
Here is an example of an integrator that wants to look at cost savings. How would that cascade? Let’s take it from the top.
First, the executive management team sets a goal such as, “We want to increase our net income this year from 5-1/4% to 6%.”
The people in the operations side have to think about, “Well, what metrics do we need to monitor to help contribute to that goal?”
The operations manager may say, “Well, I’m going to reduce my overall costs by 3%.” Now, there’s a metric, and something we can measure. Then all of this flows down to other people inside the company.
This could mean examining the RMA process, and ensuring that product is sent back on time to minimize restocking fees.
It could also mean making sure that purchasing takes advantage of all the available prepaid discounts.
These are all activities that someone should own.
Watch the video, Cascading Metrics Drive Performance, for the full discussion: