E.O.W (End of the Week) Notable Tip: Aligning product success metrics with customer priorities and strategic goals

Happy Friday!

I hope you had a great week. This week’s Notable Tip is focused on the development of valuable and critical product KPI metrics. If you are not measuring and monitoring the most important metrics of your product’s performance progress then you are missing valuable insights that can help you optimize your product. Below I end this post with a short message on how to ensure product success with well-developed measures of performance.

As always, “Success is continuous improvement.”

“Properly designed measures of performance are aligned with strategic goals of a company as well as with its customers’ priorities. They should be to the point, clearly written, focused and measure what is of value to the customer (product/service attributes).”

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Lean Wednesday Tip: Performance Measures

“When you have insufficient information about a product, process or service, you are unable to control it. Ergo, when a process cannot be controlled, the organization is at the mercy of chance. KPIs must be aligned with the strategic goals of a company as well as with its customers priorities.”

Lean Wednesday Tip: Accounts Payable Performance

 

“By encouraging your A/P team to report and make critical department KPI metrics visual, such as, process cycle time, activity lead times, and cost per invoice with industry and competitor comparisons you realize the opportunity to reduce costs, increase productivity and streamline processes.”

Reduce A/P and A/R Errors with Standardized Work

Per my previous article, “Taking a Visual Management Approach to Accounts Payable”, I touched upon a Lean Six Sigma technique, called, Standardized Work.

“Standardized work is often referred as standard operating procedures to refer to the activities that must happen in order to complete a process. Essentially, everyone doing the job does it exactly the same way.” There should be no difference as to how your Sr. Accounts Payable Manager enters and processes bills versus your Junior Accounts Payable Coordinator. There would also be no difference between the 10th time they did the work or the 7,000th time they performed the work.

These standards and process procedures should include visual checklists, setup procedures, an integrated preventative plan, or other process steps. They should be written in terms of expected behavior or actions, and must be auditable.

Why do visual process controls make sense? It is known that people gain 80% of their information from their vision, 18% from their hearing and 2% from other senses. By implementing visual standard operating procedures for Accounts Receivable and Accounts Payable you aid in the reduction of transaction errors and process cycle time; and improve overall productivity, and client and vendor relations.

Critical departmental information, such as, KPI metrics (cost of A/P and A/R invoice, current process cycle time, on time delivery rate, et cetera) compared with industry and competitor data should also be visual as this will prompt your team to look for opportunities to improve.

The Most Important HR Metrics that you should be tracking

To really understand the health and performance of your human resources function, I have created a list of the most important HR metrics that will provide a clear picture of how the department is performing.

  1. Cost of Hire
  2. Ratio Compensation/Benefits to Revenue/Profit (compare each year to industry averages)
  3. Employee turnover rate of new hires within their first 24 months
  4. Percentage of new hires that rate training and educational opportunities among the top 3 reasons they accepted and still love their job – compared with the % who rate training and educational opportunities as excellent 12 months into the job
  5. Quarterly turnover % of high performing employees
  6. Turnover % of low performing employees within one year of receiving low rating
  7. Percentage of employees with superior performance ratings against salary levels
  8. Monthly turnover rate
  9. Revenue per employee: total revenue/total number of employees
  10. Percentage of women promotions to top level positions
  11. Promotions Rate: Promotions/Headcount
  12. Number of raises
  13. *Compensation Analysis to ensure competitive market salary is offered

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