It Doesn't Work for Long When Managers 'Work the Numbers'
Managing your organization is about the numbers: What is generating the revenues? How are funds being spent? Are the investments of people, time, equipment and other resources generating the desired result? Are you keeping the productive assets in shape to keep producing? Are customers satisfied? Is the quality of your product or service what it should be? Every organization's leadership, whether the company is large or small, needs to know the financial results they are getting and what activities, products, and people are producing them. Numbers are not just score cards, they are indicators of things going right . . . and things going wrong.
Another company that I have worked with had an interesting situation in which three different operating sites had very different results than expected. Each met their budget and performance goals; only one had not been expected to do so because of economic and industry issues. Facility A's results were reviewed and it was found that the manager had decided to forgo putting in a significant capital investment in order to meet the performance objectives.
The risk to the organization as a whole?
Much like those at CYA: production quality, delivery, and customer satisfaction were beginning to reflect less than satisfactory operations. But at year end, the numbers "looked good." The manager was reprimanded for failing to look at the long-term consequences of not making the investment. Customers and sales were being impacted at the beginning of the next operating period and would continue to be impacted until the capital investment could be made, ultimately at a higher cost; because of the delay additional expenditures would be required.
Facility B made its performance numbers and was found to have "creatively" managed the timing of sales and expenditures to meet the financial performance. The "leadership" team is no longer employed.
Facility C was reviewed and found that it had been using the financial results of each period to manage the activities, processes and staffing. By understanding the operations and where they were profitable and where they lost money, the facility's management shifted its focus to selling more of the profitable products and they removed incentives on selling products that were losing money. The manager and team at the facility learned how to control costs, increase margins and sell the profitable products. They improved delivery times to customers and achieved positive results. And by the way: Facility C was the site not expected to do well.
--By Lea Strickland