This past week I was assigned to pick up the food for a volunteer test group.  I went to get Pizza and as I was standing at the payment counter, I noticed a computer screen on this wall.  In big, black, block print, it read “LEADERBOARD.”  I was immediately excited to see this.  As I was waiting for my order to be finished, I was trying to identify what was being tracked by the “leaderboard” and how it worked.  It was obvious that the leaderboard was networked with other stores and I quickly noticed that the store I was purchasing from was second from the bottom.  This piqued my interest further.   I decided to speak with the manager to understand how it worked.

Me:  I noticed your leaderboard on the wall; it looks interesting.  It appears to be tracking certain success factors and percentages.  Do you get rewarded when you hit certain levels of performance?  The reason I ask is I work for an organization where we use effective management, measurements, and scorecards to drive bottom line profitability.

Manager:  Yeah, it tracks just about everything in the store from the time a phone call was placed to the time the order leaves the store for delivery.  Corporate can pull up data on just about anything in the store.

Me:  It doesn’t sound like you believe it’s a good thing by the way you are speaking.  Do you get recognized or rewarded for hitting certain levels of performance?

Manager:  No, it basically indicates what you have to do as a minimum to keep from getting fired.

The manager continued to explain that this tracking system was to help employees have higher levels of customer service, reduced mistakes, and shorten production times, among many other things.  While those are great focus areas, I was emotionally deflated by the way he explained it.  This employee was telling me that the “Leaderboard,” this scorekeeping system, was the worst thing about his job.

If organizations are to succeed against strong competition and have higher levels of profitability, measurement cannot build fear and negativity into employees.  Driving bottom line performance with the right measurement will engage people and get people excited and committed to push performance levels.  By using our piles of data, managers can help employees sort out measurements that drive individual results.

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Some scorecards are very detailed and can inform you about the unique design of the course and about each hole so that each golfer can play to their own abilities. Scorecards in golf provide a lot of beneficial information. The score is the ultimate measurement of your ability as a golfer, but that is just the beginning. I have also seen golfers use score keeping to track not only their score, but track every single stroke they make. The serious golfers track the tee-shots ended in the fairway, how often they reach the green in regulation, how close to the hole their “approach shot” lands, and how many putt’s they make on each hole. There is plenty more, but the purpose is to evaluate and improve their game.

In the exact same way that scorecards are used in golf, they can be used in business – to improve your game! A personal score card in business is the perfect way to track an individual’s performance and contribution to the organization. Let’s draw some lines between the two.

Golf:
At the end of a golf round, I know if I am shooting above par, at par, or if I played really well, then I’m hopefully under par. If I’m under par, I’m winning.

Business:
Much like golf, at the end of the day in business a personal scorecard tells me if I’m winning and how I have contributed to the bottom line. It will tell if I’m making money for the business or if I am spending it.

Golf:
When I track all of my strokes in a golf round on my score card, I know where to focus my attention the next time I go practice at the range.

Business:
When I track my individual performance at work, I can see where I need to focus my attention the next day, week, or month in order to be more successful. If you are not tracking strokes at work, how can you improve your long or short game? You must have a personal score card that speaks to you. You need to know how many strokes you are taking to get your work done. Just as you need to know if your tee-shots are hitting the fairway. You need to know if you are hitting your goals or not. Remember, the least amount of strokes in golf means you are getting the most out of each stroke. There is the same focus in business….do more with less!

Golf:
A common phrase in golf is you “drive for show and putt for dough.” (Dough is referring to money or cash). This means the winners don’t just hit the ball far, but they also have a refined skill to make the precision shots that are so important to their game.

Business:
In business, you have to know if you are “putting for dough.” You need to know what it is that you do that creates profit for your business. Developing your business acumen and using a scorecard is critical to individuals and organizations that are looking to up their game.

Mr. Giuliani spoke about how he was able to reduce the crime rate in New York City.  Mr. Giuliani said, “Tracking and finding the areas that need improvement is the first step.”  He implemented a system for tracking where, what time, and what type of crimes were occurring in the city.  Using this data he was able to identify the areas where more law enforcement was needed and know what time of the day demanded the largest number of law enforcement personnel in the city.    Through having the right number of law enforcement personnel in the right areas, at the right time, he was able to reduce the crime rate in New York City by 60-70%.  New York City is now considered to be one of the safest large cities in the United States.

Mr. Giuliani then spoke about how he was able to decrease the number of people in NYC on welfare.   He began by looking at how the case workers were being compensated for their work.  He found the case workers for many years were being paid according to the number of welfare clients they had.  Therefore, it was more lucrative for the case workers to have people remain on welfare.  He decided to make a change and pay based on the number of jobs the case worker helped find for their welfare clients.  Through this change, in a span of 4 years, the number of people on welfare decreased from 1.1 million to 550,000.  A decrease of 50%!   This improvement in saving the tax payers tens of millions of dollars.

Many times businesses “leave” money on the table because they are working ineffectively, like the New York City was with law enforcement, by not knowing where their people should be and when they should be there.  Often they are scared to make some of the simple changes because they have been working the same way for so long, just like the case workers in NYC who were being paid and incentivized to keep their clients on welfare.   What if your employees tracked the information that made them successful?  What if they not only tracked the information, but understood and used the information as feedback to identify what they could change to be more successful?  What if your employees were compensated, motivated, and/or driven to do those things that would add to the bottom line profits of the business?  What would be the increase in profits?  What would be the decrease in costs and spending?

Bottom Line Leadership is specifically designed to address these questions.  It is created to have immediate and long-term positive influence on the bottom line profits of your business.  It will increase motivation in your employees by helping them answer the question, “What is it that I do, what do I get paid for?”  It will offer the leadership in your organization a better understanding and utilization of key fundamental leadership skills to drive the changes.  This program is a “game changing” business solution and for some companies an overall intervention.  It has been so successful in providing a Return on Investment that it is guaranteed to pay for itself by the time the program is done.  You truly have nothing to lose!

• People work an average of 45 hours a week; they consider about 17 of those hours to be unproductive.

• More than half the participants, 55 percent, said they relate their productivity directly to their software.

• People spend 5.6 hours each week in meetings; 69 percent feel meetings aren’t productive.

• Only 34 percent said they are using proven scheduling tools and techniques to help them gain more free time and balance in their lives. Likewise, 60 percent said they don’t have work-life balance, and being unproductive contributes to this feeling.

• Women had an average productivity score of 72 percent, compared with 71 percent for men.

• The most common productivity pitfalls are unclear objectives, lack of team communication and ineffective meetings — chosen by 32 percent of respondents overall — followed by unclear priorities at 31 percent and procrastination at 29 percent.
(Source:  Microsoft Personal Productivity Challenge)

If you are responsible for Profit & Loss, top line growth, cost management, or higher productivity, this study should have your attention.  What type of impact would it have on your organization if you could reclaim the 38% of vanishing productivity?  Most organizations would be able to increase profits, drive down costs, and simply get more done with existing fixed costs and resources.  Surprisingly, organizations can do this by implementing the right tools and processes that:

• Clarify and communicate goals of the organization in a way that is relevant to each individual.  This requires commitment, results based leadership and is the responsibility of leaders, managers, and supervisors.

• Links the contribution of employees to organizational goals and helps them see why they matter to the organization.

• Use communication, feedback and coaching to build motivation and commitment all while helping employee see how meaningful and engaging the drive for increased profits  and productivity can be.

Develop your people to be more productive and performance focused.

Most satisfied employees feel empowered. This means they must have the tools, support, training and ability to make decisions. In addition, a leader needs to become more of a coach than a “teller” or dictator. Coaching creates an atmosphere of collaboration, trust, and confidence, where constructive and sincere feedback is accepted. Remember, “The worst feedback is no feedback”.

Employees need to understand how their job function contributes to the bottom line of the organization. Employees will tend to work harder if they feel like their work is meaningful and adds value. My first job in high school was at a dry cleaner. I staffed the front counter taking in clothes, entering the information into the system and creating an invoice for the customer. The job was not exciting and every day I wished for the fewest customers possible. When a customer came in I would get the order entered as fast as I could and get back to doing nothing but wait for the next customer. Looking back, I imagine that not everything was entered properly and those mistakes, although small, cost the company some profits.

I wonder if it would have been different if the manager took some time to explain how my work added value to the company through something simple like a scorecard. What if we created a scorecard review of my key functions so I could see the importance of the work I was doing. Even the “front counter” employees need to understand how important the work is that they are doing.

If employees are happy, customers are happy. When customers are happy, they come back and tell others of their experience. Repeat business and referrals equal greater profit. Sometimes we need to step back and look at our own performance. Are we focusing solely on the profit and forgetting about the people driving the profit? Are we creating an atmosphere where employees are coached or are we a dictator? Do the employees know how important their job function is? Do the employees feel empowered and find their work meaningful? Are we tracking the important functions that help build profit? We need to look at these questions often as we lead for greater profit.

So how does Warren Buffett’s success apply to you?  In November 2009, Warren Buffett and Bill Gates participated in a Town Hall meeting at Columbia University.  During this event the following question was posed by a student:

Student Question: “Mr. Buffett, Mr. Gates, thank you for being here today.  My name is Justin, I’m a second-year MBA, as I get ready to graduate, I was wondering, what’s the one thing that your MBA didn’t prepare you for when you got out into the real world?”

Warren Buffett Response: “Well, I was — it prepared me very well, not the whole degree, but specific professors prepared me very well for what I wanted to go into.  I knew I was interested in investing, like I say, from the time I was six or seven years of age.  So I was lucky that I found what turned me on early on.  And I had these two marvelous professors here at Columbia that just being around — I had read all the stuff they had written.  So it wasn’t I was acquiring lots of incremental knowledge but I was getting inspired.  They were terrific for me.  They treated me like a son.  They would take me out to dinner.  Ben Graham did the same thing for me.  So it gave me confidence in myself.  It just propelled me into a field I already love with a terrific tailwind from these professors that believed in me. [APPLAUSE]  But let me add one point because — to the MBA situation.  Right now, I would pay $100,000 for 10% of the future earnings of any of you.  So anybody that wants to see me after this is over — [LAUGHTER] [APPLAUSE]  If that’s true, you are a million-dollar asset right now, right, if 10% of you is worth 100,000?  You could improve — many of you, and I certainly could have when I got out, just in terms of learning communication skills.  You know, it’s not something that is taught.  I actually went to a Dale Carnegie course later on in terms of public speaking.  But if you improve your value 50% by having better communication skills, that’s another $500,000 in terms of capital value.  See me after the class and I’ll pay you 150-thousand.”

Monetary Value of Learning and Communication
This matters because it illustrates the importance of learning and effective communication.   As individuals, it is important to develop ourselves.  Whether you get an industry trade degree, look at going through a mini MBA program, or complete a Masters Degree at Columbia University, ongoing development of yourself is important to you, your future success, and ultimately your net worth.  Investment in learning will pay huge dividends.  If good communication skills are worth an additional $50,000 to Warren Buffet, it’s worth far more to you individually.

Heavily Invested
Ask yourself this question.  What would an investor ask you at the annual shareholders of YOU meeting?   At a high level, you might hear questions such as:
- Do you understand what it takes for you (and your organization) to win today?
- Do you understand where and how we can increase profit margins?
- Are you cutting operational expense to increase profit margins?
- How can you create distance or differentiation from the competition?
- Is the organization focusing on what matters?

If you can answer those questions, you are doing great.  If not, look to refocus your efforts.  Educate or develop yourself to the point where you can answer them.  You are heavily invested in yourself so what do you want your future earnings look like?  Are you a million-dollar person?   It’s hard to argue against hard results.

At a recent Town Hall forum for MBA program students at Columbia University, a Masters student asked Bill Gates the following question:

Student Question:  My name is Erica and I am a second-year student.  My question is for Mr. Gates.  What is the most important thing you do every day?

Bill Gates Answer:  Well, I do a lot of variety.  I think reading a lot, you know, and continuing to learn.  I’m in a lot of new areas in the Foundation, education, health.  And I love reading a lot.  So I think, you know, arming myself with that knowledge and sitting down with people who live the topic and brainstorming with them, that’s what helps me back the right people and make sure I know what’s going on.  So I guess I’d say learning is what is the key thing.

“Arming” yourself and your employees with knowledge is so important.  What would organizations look like if we “armed” people to be results based leaders who understand how to increase profit and drive bottom line results?  This can be done, by exploring and discovering what really matters and how to properly measure results.  I’m not talking about more reports, more charts, more graphs, to bore people with.  I’m talking about engaging individuals to measure and do it in a way that speaks to them as individuals.  It is about how I fit and why I matter.
    
Whether you’re looking to drive key results of your business or looking to simply educate employees on finance for non financial managers, arming your people with knowledge to be prepared for battle will ensure more focus around winning as an organization.  It’s hard to argue with results.

Competition, Winning, and Business

Your company probably has its own corporate scoreboard, but do you know where it is? If not, ask around and see if you can find it. Company scoreboards will manifest themselves in how the company shows its stakeholders the business’ earnings. Businesses need to make a profit. Companies that don’t make a profit won’t stick around, so, making a profit is a focal point for all for profit organizations. What about at the individual level? Individual performance is also measured in this way, but rather than a scoreboard, some companies use and individual “score card.” A scorecard shows how and in what ways each individual is accountable for performance that increases the bottom line. Scorecards drive results and have a tremendous impact on the bottom line and help people become more engaged in competing for “wins” at both the personal and organizational level. Asking individual members of the organization to develop a scorecard to visibly show and track performance will inspire better performance across the company and make positive changes in the following ways:

1. Hold people accountable for what they do while at work and how they contribute to the bottom line profits.

2. Help individuals see that they earn a pay check for authentic achievement, not for mindless activity.

3. Help individuals understand how each person contributes in their role to the organization’s overall profitability.

Scorecards will drive bottom-line results and create bottom-line leadership as individual contributors think more deeply about their own unique areas of the business. Keeping score of their successes on a regular basis (daily, weekly, monthly) can help people feel more energetic at work and increase their interest in organizational success over the long term. In your next weekly meeting ask everyone this simple question: Did you win or lose this week? Followed this question with, “What were you responsible for in terms of helping our company grow and be more profitable?” Using scorecards, asking questions, and engaging the entire workforce is powerful stuff, critical to the organization’s performance.

Within most organizations there is a management / leadership track – take advantage of this track by further refining and developing the leadership and management skills you already possess.

1. Improve your Peer-Leadership Skills 
 Build a reputation as a leader among your peers.  Actions speak louder than words.  At various meetings, listen and speak only when you have something important to say that will help the group to move forward.  Do not focus on negative issues.  Identifying problems is one of the easiest things to do; there is no great demand for problem identifiers, but there is a great demand for problem solvers.  Be Solution Oriented:  if you address a problem, be sure that you have a potential solution to discuss as well.  Share information and communicate often with your peers.  This helps you and others to grow and develop.

2. Improve your Administrative Skills
 Develop an administrative competence in every form of communication and logistical follow up you perform in your job.  Cultivate a reputation as someone who produces high-quality work no matter what your endeavor, no matter who your audience.

3. Develop your General Leadership Skills
 Leadership is a learned skill.  Constantly seek to learn from those successful leaders within and outside your organization.  What pearl or pearls of wisdom can you pick up and use to help you become a leader?  Pick and choose from their leadership styles, yet make it your own as you continue to develop your personal style.  Whatever style you choose, keep these “pearls of wisdom” in the forefront of your mind and think about how to apply them as you move forward in two key areas – achieving bottom line results for your organization and developing your people.

Here are some key ideas to consider as you move along this path of continuous leadership improvement during the first half of the New Year:

• Know yourself and seek self-improvement opportunities

• Be technically proficient and know how to apply your knowledge

• Seek out responsibility and take responsibility for your actions

• Make sound and timely decisions

• Set a good example for others

• Know your people and look out for their wellbeing

• Keep your people well informed

• Help your people develop a sense of responsibility

• Ensure that task job tasks you delegate are understood, supervised, and accomplished

• Train your people as a team

• Develop plans of action that are in accordance with your team’s capabilities

Measuring Success 
Later in the interview I asked, “In the store’s early days how did the Skaggs brothers measure results or success?” Ted’s response was simple. He said, “At the end of each day we counted the cash in the cigar box and entered the total in a ledger we used to keep track of our sales. It was cash only in those days, because there were no checks or credit cards. That meant our sales for a day was the cash we had in the cigar box at closing time.”
 
Ted explained more about the ledger, “We kept track of daily sales in one column and added the days of the week into a weekly total in the next column. The weekly totals then added up to a monthly total, and so forth.”
 
I asked, “What other measurements were used in the early stores?” He said, “It didn’t take long to learn that when an owner isn’t managing the store that labor cost can get out of hand. So we divided the weekly labor cost in dollars, by the weekly sales dollars and called it Labor Percent. It was easy to know your labor dollars, because we paid the help in cash right out of the cigar box each Friday.”
I continued, “How was Labor Percent used to manage a store?”
He explained, “We figured out Labor Percent benchmarks so we could tell within a week or so if a manager was using too much labor. As you can suspect, there wasn’t much of a problem with a manager using too little labor. Figuring Labor Percent each week gave us an easy way to look at the biggest controllable expense we had.”

Overall Gross Margin
Ted described another bottom line measurement used in those early stores. He continued, “At first we kind of stumbled onto things as we opened new stores. By knowing our sales for a period of time, what it cost to purchase the products we sold, and how much inventory we had on hand, we could figure out an overall gross margin percent for the store. That made it possible for us to help a manager whose gross might be lower than other stores. If a gross was low it meant that something was wrong. It gave us something to look at and work on.”
 
My next question was, “How long did it take for the company to develop a Profit and Loss Statement?”
 
Ted wasn’t sure about the answer, but clarified, “I know it wasn’t for a while, because none of us had much accounting background. But after a while I think it was a bookkeeper that started to make them. When we got used to them, they came out every few months. Then, when the company got bigger the P&Ls came out each month.”
 
Measurements for Success
I summarized to Ted, “So what you are telling me is that the primary measurements for success in the early days of self-service grocery were:

1.  Sales Per Week,
2.  Labor Percent Per Week
3. Store Gross Profit Percent After An Inventory
4. A monthly Profit and Loss Statement.

Is that correct?” Thinking for a minute he said, “That’s about it and it worked pretty good for us in those days.”

Having heard this piece of history, consider this: “What has changed in measuring bottom line results or success in the grocery industry from 1915 until today?” The answer is: the cigar box, and not much else. That’s why, “The more things change, the more they stay the same.” The sad truth is that almost all retail stores today function with the same four primary measurements that were used almost a century ago. With the unbelievably sophisticated POS systems, scanning, computers, and expensive software, can’t we do any better than what Ted and his colleagues did so long ago?

Consider the cost of an empty cigar box and ledger, compared to the cost of today’s highly computerized POS systems. If Ted and the Skaggs brothers could get four critical measurements out of a cigar box, how much valuable information should we get and use from a POS system that can cost hundreds of thousands of dollars?
 
How well do you use the information supplied by your POS and accounting systems? Is your organization’s bottom line leadership and measurement strategies stuck in 1915, or have they progressed beyond the four standard measurements into more specific and motivational ways to measure results?
 
Pennies Lead To Profits, Dollars Lead To More Profits
In an industry where dollars of sales only produce a few pennies of profit, do you honestly believe that measuring bottom line results on a weekly and monthly basis, and only in a manner that hasn’t been improved in almost a century, is adequate? I don’t think so! Give these ideas some thought and then consider how much information coming from your front-end and accounting systems are being used, and how much is going to waste. Remember, if we don’t actually use the information that comes out of the POS system, we might as well use a cigar box.