Throughout more than 30 years of expertise, I have had the privilege of working in executive positions for companies such as IBM, HP, UNISYS, MICROSOFT, and AT&T, in all of them developing sales-related roles for large companies, corporations, and government entities.
All of them are public companies. They must comply with the commitment established with shareholders every quarter that generally focuses on financial metrics such as income, profits, solvency, efficiency, and profitability ratios.
Obviously, within the company, these objectives are translated into specific goals by division, business line, region, and product/service, which are poured in the organisation to the salespeople’s level with whom they have direct contact clients. Usually, the definition of these goals is done during a planning process that can last several months, and that can be “top-down”, based on a description of the executive levels that seek to achieve a result following their commitments, or “bottom-up” taking into account the market situation, the feedback from the sales force to define the aggregate number that can be aspired to as an organisation, it is also possible to determine the goals with a combination of both.
Regardless of the methodology used, one of the crucial elements for the sales force as a result of planning is the income they have to generate. Once this number is known, a whole series of indicators known as KPIs (Key Performance Indicators) are established, which must be aligned with the achievement of the objectives and which will be monitored regularly to understand what the team’s performance is at a given time compared to what is sought.
So far, everything makes sense, and if companies thought of “Simplicity” as a motto or even as a value, things would be much more efficient and effective. Unfortunately, the larger and more complex the company is, the more inclined it is to measure more and more things. I am not kidding – because I’ve seen it – when saying that some companies use spreadsheets of hundreds of lines and columns in which they capture the indicators of performance that they have to evaluate in quarterly or semi-annual meetings, which becomes unmanageable, it is humanly impossible to monitor hundreds of hands that, because there are so many, are no longer the critical indicators for the business and in many ways cause a blurring of the activities of some areas by founding their performance on hands that are not aligned with the fundamental objectives of the business.
On the other hand, we have the personal aspect, we all have goals and objectives that we can establish as quickly as when we make the New Year’s resolutions, or we can define them in a more structured and committed way so that we set the equivalent of KPIs of our performance.
We all have a series of personal roles that we develop every day, such as being a son, father, runner, golfer, investor, manager, chef, and areas that we must develop or take care of, such as health, spirituality, social responsibility.
Many of us set goals for each of these roles. For example: improving our health through the year can be a very general goal but defining a plan to have a BMI (body mass index) of 22, have 45% muscle and 12% body fat can be a set of KPIs that are too complex and difficult to monitor, implying the purchase of specific equipment to achieve it. A more straightforward and more effortless KPI to observe is to lose from 80 Kg to 70 Kg in the next 12 months. Unless we are almost athletes, we do not need to measure so many things. Instead, we count one that is the most important and “automatically” implies improving others; we will achieve the primary objective, which is to improve our health.
I believe that both professionally and personally, we must focus on what matters, think about simplicity as a way of life. As executives or owners of a company, we must identify the 3 to 5 things that are fundamental to take our organisation to the next level. We can think about the status of inventories, accounts receivable ageing, in reducing indebtedness or in anything else that directly impacts the balance sheet or the P&L. Those 3 to 5 things that everyone in the organisation understands and can be linked to how their role or activity positively or negatively impacts objectives’ achievement, being these easy to measure and understand, committing ourselves to publish them throughout the organisation so that at all times we know where we are standing.
It is useless to have 100 indicators that distract people from their obligations to generate, review, correct, format, and present them when we can achieve the objectives with a handful of simple indicators to obtain, optimising our teams’ time.
Carlos Allende
CEO LOVIS Spain