Finding the right performance measure in today’s organizations is like trying to determine for each swimmer the right temperature of the water to swim in the Gulf of Mexico (a great place to vacation). There are many variables to consider. Certainly, the amount of revenue produced for each customer would speak to the bottom-line of most organizations. In relationship selling, you have the personality factor.
In fact, Mark Johnston and Greg Marshall, authors of Relationship Selling, maintain that customers pick up on a salesperson’s attitude. Does good chemistry exist between the salesperson and the customer? That’s an important performance measure. When developing performance measurement with relationship selling in mind, good chemistry between the salesperson and customer should be a factor.
The amount of customer referrals can be an extremely good indicator, because this friendly act speaks to the issues of customer trust. Quality expert George Peeler argues that the key to designing and using systems that will build the traditional product source relationship in the Quality Era will be the creativity and commitment of management and customer insight provided through empathy. Successful organizations understand the attitudes and emotions of their customers. Therefore, connecting with customers would be a vital performance metric.
In being effective, businesses need to understand what to measure. Many times, organizations are measuring the wrong objectives or doing the analysis incorrectly. Johnston and Marshall argue for designing an effective measurement system which includes (a) what do we want to measure, (b) when do we want to measure, and (c) how do we measure. Therefore, it’s important that organizations create effective performance measures.
Yet, performance measures are very difficult. Management expert Stacey views performance measures as a process rather than an event, involving a series of specific activities for creating, implementing, and using performance metrics. Organization must be careful about using the right data collection tool to measure performance. For example, most people hate doing surveys.
Given this reality, organizations must carefully analyze the survey data for bias. Are they truly getting a picture of their customers? I found focus groups more useful. Peeler further explains that management must facilitate the processes of quality innovation through prompt action, removing barriers to employee performance by continually attending to process improvement. Regardless, management must establish a reliable performance measurement system for organizations. The bottom-line is that there is inherent risk with customer surveys.
Finally, businesses should be strategic and focused in their performance measures. If an organization wants to spin its wheel and go nowhere, having unclear direction is a great pathway. It’s important to have clear objectives and desired outcomes. The transformation process from where an organization is to where an organization wants to be is a clear application for performance measures.
Johnston and Marshall argue that specific, realistic, and measurable objectives are essential to a sales training program. They further acknowledge that salespeople exist in a highly competitive environment where a great deal of information must be assimilated for effective customer sales.
Please discuss organizational performance measure from your professional experience.
© 2014 by Daryl D. Green
4 thoughts on “Performance Measures in Today’s Businesses”
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Dr. Daryl D. Green
Performance measurement is important to my employer, Pilot Flying J. Prior to acquiring Flying J, Pilot was primarily in the convenience store and travel center industries. During this time, performance metrics focused on a number of disparate items including: gross fuel margins in the form of weighted gas and diesel margins, inside sales, and restaurant sales. Upon acquiring Flying J, Pilot found themselves building metrics for increasingly diverse business groups. Namely, the terminal, fracking, logistics, and skid businesses. The nuances of each of these have underlined the importance of establishing business group-specific metrics. Establishing performance metrics for each specific business group rather than a handful of blanket metrics ultimately allows for more effective decision-making.
Thanks for sharing!