What Gets Measured Gets Better
Simple Wins.
We have long struggled with connecting KPIs (Key Performance Indicator) to the goals of our not for profit mission. Adding to that, the mechanics of our bonus program weren’t easily understood. Since they weren’t widely understood they didn’t do their job of motivating behavior. When a bonus program doesn’t motivate it’s just a give away.
A five-year-old should be able to understand them.
So we started from scratch and boiled them down to four basics. These are best for us where we are right now. They may be different next year and may be different for you.
I chose these because they are fundamental retail metrics. They are also a mechanism to teach employees how their efforts affects results.
KPIs for this year are Sales, Transactions, Average Transaction, and Net income. Pretty normal stuff. Now they are also the bonus buckets.
Alignment. I know!
The puzzle was how to make it easy and fun for everyone to connect with and understand them. The five-year-old rule. Or the elevator speech rule. Same basic idea.
Getting ready to present our focus for the new fiscal year I prepared a document recapping the updated program. It was on my computer screen with the KPIs in a neat vertical row of numbered points. I kept just looking at it asking myself how everyone was going to connect. Simple always wins. Something was there. What was it? Hmmm.
Then, wait, what? S-T-A-N!
The first letter of each of those metrics spells STAN ! Those bullet points were already arranged that way. Sometimes serendipity jumps out and grabs you.
So, how do we bring STAN to life? The possibilities are endless.
So we came up with STAN’s Build It Board. Daily communication about how the store is doing with its bonus goals, and consequently the organization's KPIs and financial health.
Sales and net revenue are trailing measures, the report card. Transactions and average transaction, if watched daily can be lead measures that move the trailing measures. Still, other important lead measures move the top and bottom line needles (lead measures). There are a lot of possibilities here as well. We picked donations, volunteer hours, and production. If those are healthy we can’t be far off the mark.
They became part of STAN’s Build It Board.
Something was still missing. The Why.
At Habitat for Humanity Families Served is our ultimate measure. It’s the why that ties the entire organization's efforts together. Serving Families.
One more measure joined STAN’s build it board. STAN is updated daily tracking how we are doing to our measures.
So there you have it! STAN will guide us through the next year. I am excited to see how, just like a new employee, STAN connects with and contributes to our operation.
I’ll let everyone know how STAN is doing from time to time. He has a busy year ahead of him.
Special Notes:
Trailing measures are measures that can’t be affected. a P&L is a good example. When it comes out it’s just a report card.
Leading measures are those that when known can be acted upon to affect those trailing measures.
Thanks for reading!Â
Tim Gebauer - Thrift Retailer
I am happy to connect on LinkedIn.
Check out some great custom artwork at my Redbubble site.
You can also find me on Pinterest.
Check out my Online Sellers book on Amazon.
I also write on Medium.
<script type="text/javascript" src="https://cdnjs.buymeacoffee.com/1.0.0/button.prod.min.js" data-name="bmc-button" data-slug="timg5858" data-color="#BD5FFF" data-emoji="" data-font="Cookie" data-text="Buy me a coffee" data-outline-color="#000000" data-font-color="#ffffff" data-coffee-color="#FFDD00" ></script>