A business can thrive forever if it has happy customers, happy employees and happy investors (all at the same time!). Here are three ways to measure how you’re doing:
- Happy Customers: ask the single most important question – “On a scale of 0 to 10, how likely are you to recommend us to a friend or colleague?” See Net Promoter Score – http://www.netpromoter.com/why-net-promoter/know/
- Happy Employees: ask “which of the following 12 statements applies to you?” See “The Top 12 Motivators (Q12)” and “Engagement Ratio” at Gallup.com http://www.gallup.com/consulting/52/employee-engagement.aspx/ or read “First, Break all the Rules” http://en.wikipedia.org/wiki/First,_Break_All_the_Rules
- Happy Investors: Return on Capital Employed (ROCE) or Return on Net Assets (RONA)
If you think this is too simple and you’re determined to have lots of Key Performance Indicators (KPI’s), you might want to add some of the following:
- Operations: Value-Added Ratio or Throughput Efficiency (ratio of Value-Added Time to Total Lead-Time (Dock-to-Dock))
- Operations: Overall Equipment Effectiveness (OEE)
- Finance: Return on Sales (ROS) or Net Margin
- Innovation: Percentage of sales turnover generated by products or services developed in the last x years (x=2 is common)
The Balanced Scorecard approach has a lot to commend it – a balance of measures including Financial, Operational, Marketing/Sales, and Learning and Growth / Innovation. See http://www.balancedscorecard.org/BSCResources/AbouttheBalancedScorecard/tabid/55/Default.aspx