|
|
|
ONLINE FEATURES
Book Reviews
BW Video
Columnists
Interactive Gallery
Newsletters
Past Covers
Philanthropy
Podcasts
Special Reports
BLOGS
Auto Beat
Bangalore Tigers
Blogspotting
Brand New Day
Byte of the Apple
Economics Unbound
Eye on Asia
Fine On Media
Green Biz
Hot Property
Investing Insights
Management IQ
NEXT: Innovation
NussbaumOnDesign
Tech Beat
Working Parents
TECHNOLOGY
J.D. Power Ratings
Product Reviews
Tech Stats
Wildstrom: Tech Maven
AUTOS
Home Page
Auto Reviews
Classic Cars
Car Care & Safety
Hybrids
INNOVATION
& DESIGN Home Page Architecture Brand Equity Auto Design Game Room SMALLBIZ Smart Answers Success Stories Today's Tip INVESTING Investing: Europe Annual Reports BW 50 S&P Picks & Pans Stock Screeners Free S&P Stock Report SCOREBOARDS Hot Growth 100 Mutual Funds Info Tech 100 S&P 500 B-SCHOOLS Undergrad Programs MBA Blogs MBA Profiles MBA Rankings Who's Hiring Grads |  |
MAY 8, 2006
By Jack and Suzy Welch How Healthy Is Your Company? To take the pulse of any business, there are three vital signs that really matter If you had to pick, which three measurements give the best sense of a company's health? -- Anonymous, Orlando Every type of business, not to mention every type of manager, has a different set of vital statistics that really matter. For manufacturing people, it could be inventory turns, on-time delivery, and unit cost. For marketing people, it could be new account closings, market share, and sales growth. For call center managers, it could be the time it takes to answer, number of dropped calls, and employee retention. If you're running a business, though, whether it's a corner store or a multi-product multinational, we would say there are three key indicators that really work: employee engagement, customer satisfaction, and cash flow. These measurements won't tell you everything you need to know, but close to it. They get right to the guts of a company's overall performance, now and in the future. Employee engagement first. It goes without saying that no company, small or large, can win over the long run without energized employees who believe in the mission and understand how to achieve it. That's why you need to take the measure of employee engagement at least once a year through anonymous surveys in which people feel completely safe to speak their minds. But watch out. Don't fall into the common trap of letting these surveys devolve into questionnaires about the little stuff, such as the tastiness of the food in the company cafeteria or the availability of spaces in the parking lot. The most meaningful surveys probe how employees feel about the strategic direction of the company and the quality of their career opportunities. They ask questions such as these: Do you believe the company has goals that people fully grasp, accept, and support? Do you feel the company cares about you and that you have been given the opportunity to grow? Do you think that your everyday work is connected to what company leaders say in speeches and in the annual report? The best employee surveys are getting at one question: Are we all on the same team here? Growth is the key to long-term viability, which is why customer satisfaction is the second vital sign for general managers. Again, this measurement can be obtained by surveys, but those are rarely enough to give you the gritty data you need for a real read of the situation. No, you need to make visits. And don't just chat with your "good" customers. See the ones whose orders are inconsistent or dropping -- the ones your salespeople don't like to see themselves. Make these visits about learning. Find a dozen ways to ask: "What can we do better?" And don't leave without finding out if each customer would recommend your products or services. That's the acid test of customer satisfaction. Finally, there's cash flow, which is valuable because it just does not lie. All your other profit-and-loss numbers, like net income, have some art to them. They've been massaged through the accounting process, which is filled with assumptions. But free cash flow tells you the true condition of the business. It gives you a sense of your maneuverability -- whether you can return cash to shareholders, pay down debt, borrow more to grow faster, or any combination of these options. Cash flow helps you understand and control your destiny. Without doubt, there are lots of ways to measure the pulse of a business. But if you have employee engagement, customer satisfaction, and cash flow right, you can be sure your company is healthy and on the way to winning. There seems to be an explosion in executive coaching recently. Does it really work? -- Steve Mostyn, Edinburgh, Scotland Generally, yes. The value, of course, depends on the quality of the coach. This is a field where there is no specific training and certainly no form of accreditation. And there are some charlatans out there who simply tell you what you want to hear or don't have much feel for leadership, having never done it themselves. They're useless. Good executive coaches can provide a truly important service, however. They can look you in the eye and tell you what no one else will, especially if you're the boss. You don't listen carefully enough. You're too much of a loner. You kiss up to the board but too often bully your people. You rely too much on the advice of one employee who really isn't very smart. Or any number of other unpleasant messages like that. The challenge is for you to listen. Because at the end of the day, the ultimate value of executive coaching, done right, is only as big or small as your ability to hear it.  Jack and Suzy Welch are co-authors of the best-seller Winning (HarperCollins 2005). They look forward to answering your questions about business, company, or career challenges. Please e-mail them at thewelchway@BusinessWeek.com
BW MALL
SPONSORED LINKS
Get BusinessWeek directly on your desktop with our RSS feeds.
Buy a link now! Add BusinessWeek news to your Web site with our headline feed. Click to buy an e-print or reprint of a BusinessWeek or BusinessWeek Online story or video. To subscribe online to BusinessWeek magazine, please click here. Learn more, go to the BusinessWeekOnline home page  | | |
 Copyright 2006, by The McGraw-Hill Companies Inc. All rights reserved.Terms of Use | Privacy Notice |
Printer-Friendly Version