Thursday, October 12, 2006

How do you Measure the Growth of a Company?

By Market Share?
By Sales Revenue?
By Op Inc?
By Earnings Per Share?
By Quarter to Quarter Comparison?

All traditional measures that fail to change behavior but dominate the news. Lets look at a possible measurement that I believe is better.

How about measuring employee talent levels? Make it all about development of your employees. Add a cross training matrix to the corporate level (on the shop floor and in the office!). Focus on increasing the skills of all employees which is your future source for all creativity, innovation and improvement. Unless, of course, you are outsourcing that along with manufacturing.

Do you have any other measurements that are better indicators of improvement and growth?

4 comments:

curiouscat said...

The idea of balanced scorecard involves the issue you raise. The problem is that such efforts can be a slippery slope toward waste in setting up way to many measures. It isn't perfect, but I think balanced scorecard offers some good insight into this area.

Kev said...

For my previous company Floor space utilisation (area turnover [£] / area used [m2]) was good as it was for mostly manual assembly style work.

Current company is a rolling mill and contribution per mill hour works well as the mill is the main constraint for the business.

This side of the pond the 7 measures detailed on http://www.autoindustry.co.uk/features/qcd/
are quite common and are used as a standard.

Meikah Delid said...

I'd go for employee development. I believe, if you have happy employees all else will follow: increasing market share, sales revenue, etc.

Craig said...

I have no problem with employee development as an indicator unless all that is measured is course attendance. Training alone rarely leads to improvement or achieves very minimal improvement. The other potential imbalance would be if they employee development does not synchronize with the business need.