Four Steps to Measuring What Matters

When it comes to assessing performance, business executives can be a lot like old-time baseball scouts. They've been around so long that they've developed a gut feel for which statistics matter most.

But as Michael Lewis describes in Moneyball, the Oakland Athletics discovered that the metric the team's scouts used to choose players had nothing to do with whether those players would score runs. They had been measuring the wrong thing, and executives may be making the same mistake.

The statistics that companies use most often to track and communicate performance include financial measures such as sales and earnings per share growth. Yet these have only a flimsy connection to the objective of creating shareholder value. Executives cling to these metrics because they are overconfident in their intuition, they misattribute the causes of events, and they do not escape the pull of the status quo.

Useful statistics have two qualities. They are persistent, showing that the outcome of an action at one time will be similar to the outcome of the same action at a later time; and they are predictive, demonstrating a causal relationship between the action and the outcome being measured.

Choosing the right statistics — metrics that will allow you to understand, track, and manage the cause-and-effect relationships that determine the value of your company — is a four-step process. I'll illustrate the process in a simplified way using a fictional retail bank based on an analysis of 115 banks by Venky Nagar of the University of Michigan and Madhav Rajan of Stanford. Leave aside, for the moment, which metrics you currently use or which ones Wall Street analysts or bankers say you should. Start with a blank slate and work through these four steps in sequence.

Step 1: Define your governing objective. A clear objective is essential to business success because it guides the allocation of capital. Creating economic value is a logical governing objective for a company that operates in a free market system. Companies may choose a different objective, such as maximizing the firm's longevity. We will assume that the retail bank seeks to create economic value.

Step 2: Develop a theory of cause and effect to assess presumed drivers of the objective. The three commonly cited financial drivers of value creation are sales, costs, and investments. More-specific financial drivers vary among companies and can include earnings growth, cash flow growth, and return on invested capital.

Naturally, financial metrics can't capture all value-creating activities. You also need to assess nonfinancial measures such as customer loyalty, customer satisfaction, and product quality, and determine if they can be directly linked to the financial measures that ultimately deliver value. As we've discussed, the link between value creation and financial and nonfinancial measures like these is variable and must be evaluated on a case-by-case basis.

In our example, the bank starts with the theory that customer satisfaction drives the use of bank services and that usage is the main driver of value. This theory links a nonfinancial and a financial driver. The bank then measures the correlations statistically to see if the theory is correct and determines that satisfied customers indeed use more services, allowing the bank to generate cash earnings growth and attractive returns on assets, both indicators of value creation. Having determined that customer satisfaction is persistently and predictively linked to returns on assets, the bank must now figure out which employee activities drive satisfaction.

Step 3: Identify the specific activities that employees can do to help achieve the governing objective. The goal is to make the link between your objective and the measures that employees can control through the application of skill. The relationship between these activities and the objective must also be persistent and predictive.

In the previous step, the bank determined that customer satisfaction drives value (it is predictive). The bank now has to find reliable drivers of customer satisfaction. Statistical analysis shows that the rates consumers receive on their loans, the speed of loan processing, and low teller turnover all affect customer satisfaction. Because these are within the control of employees and management, they are persistent. The bank can use this information to, for example, make sure that its process for reviewing and approving loans is quick and efficient.

Step 4: Evaluate your statistics. Finally, you must regularly reevaluate the measures you are using to link employee activities with the governing objective. The drivers of value change over time, and so must your statistics. For example, the demographics of the retail bank's customer base are changing, so the bank needs to review the drivers of customer satisfaction. As the customer base becomes younger and more digitally savvy, teller turnover becomes less relevant and the bank's online interface and customer service become more so.

Companies have access to a growing torrent of statistics that could improve their performance, but executives still cling to old-fashioned and often flawed methods for choosing metrics. In the past, companies could get away with going on gut and ignoring the right statistics because that's what everyone else was doing. Today, using them is necessary to compete. More to the point, identifying and exploiting them before rivals do will be the key to seizing advantage.

Performance - Turbo-Charge Your Life With Powerful Self-Talk

Self-talk is the inner chatter that accompanies us in most of our waking moments... Your self-talk can be a powerful aid to your performance, or it can be destructive...

What do you say when you talk to yourself? If you're like many of us, your self-talk is a caustic mixture of judgments, complaints, and verbal abuse, in the form of "tapes" - mental recordings - that you've imprinted on your mind and play over and over again... No wonder you feel down and depressed...

However, you can change the tapes you play, and your self-talk, as soon as you become aware of what you're saying to yourself... Changing your self-talk will turbo-charge your life and enhance your performance in everything you do...

You can change your self-talk right now!!!

Let's try a little test... Say to yourself, silently or aloud: "That was a stupid thing to say... How could I say _________ (pick any verbal blunder you can remember)... I'm so stupid..."

How do you feel? Perhaps you feel sad, or anxious... Take a moment to track your emotions in your body... Perhaps you have a sinking feeling in your tummy, or your face is becoming hot... Your self-talk immediately affected your body, your mental state and your emotions...

Now let's try some positive self-talk... Take a couple of deep breaths, smile, and say to yourself, aloud or silently: "I'm happy, strong and confident."

How do you feel now? Feel your emotions in your body... Repeat the words "I'm happy, strong and confident" several times – keep smiling as you do so... You felt an emotional lift, didn't you? You can give yourself an emotional boost at any time, just by changing your self-talk... If you make it a habit to repeat motivating self-talk to yourself, not only will you feel better, but you'll perform better in everything you do...

Self-talk is powerful, and it's free. It's the best thing you can do for yourself...

Erase old self-talk tapes: make new tapes

Affirmations are a form of self-talk, and you can create your own affirmations to use as self-talk... However, the best way to change your old self-talk tapes, is to make a new tape every time you catch yourself replaying an old tape...

For example, if you hear yourself saying: "I'll never get this project done... No one's helping me with it, I'm always left to do the hard work and others get the credit…"

Change your self-talk immediately... Write down your new self-talk tape which will over time erase the old self-talk tape: "This project's interesting... I'm going to have fun working with it... I'll ask ___ and ___ for their input right away... I'm taking charge of this project, it will be done in no time, and I'll claim the credit because I deserve it..."

Now repeat your new self-talk to yourself as often as you need to, particularly as soon as you can hear any faint whispers of the old self talk... Boost the new tape with affirmations, like: "I'm confident, capable and strong. I CAN do this!"

START TODAY: Use powerful self-talk to enhance your performance in everything you do...!!!

Lessons to learned in reaching goals

Today I'd like to share with you a personal lesson that I have learned on reaching goals, especially those hard, stretching, and long-term goals.

By applying this lesson in my own life, I have achieved my goal of financial freedom in about two years. My definition of being financially free is simply that I have a stable income to cover all my expenses and live comfortably without actively working much(perhaps only 3-4 hours a week at most). This may not sound much to you, but it offers me the freedom of living my life the way I want and the free time to pursue hobbies or things that interest me.

The funny thing is, I may have known this lesson all along, but never put much faith in it. Only until one day I decided to give it a try, did I really begin to see the amazing results and its true power. The lesson is very simple, but I believe only very few people actually doing it, so the value of it is largely ignored by many people.

The lesson is: to reach a hard, difficult, long-term (>1-year) goal, you need to write it down daily.

There are two important parts to it: one is writing it down, the other is "daily". It doesn't matter if it's a piece of paper, or on your computer, or your iPhone, etc. You must write it out in some way, instead of just keeping it in your head. There are many science proven benefits of doing this, but I only believe what works for me personally. And so far, I can say for sure, it has worked wonders for me.

I think that many people actually have tried this before, but didn't get much result. See, that's the trick, that's where the second part comes in, which is probably even more important than the first part. You need to write it down DAILY. 

Find a time of day when you have a few minutes to yourself, and just write it down, don't think much about it, just let it out on paper, or your computer, or somewhere. Do this for a few days in a row, you may not feel and see much difference at first. Most people who tried this would stop here. I guess that's why it didn't work for them.

But stick to it, and give it some more time, maybe a month or two, I assure you that you will start to see some changes, some results in terms of ideas you start to have, people you start to know, things you begin to notice, which all pull you towards your goal.

My experience is that I started to see it working about 2 months after doing it on a daily basis. Then after another two months or so, when I wrote it down, the goal itself was no longer a wish, hope, or future possibility, but has become a sure thing. I started to truly see and know that I could do it. That's how powerful it is.

I could write more and more, trying to convince you that this works, but I think the best way is that you simply try it for yourself. Give it a test for a few months. I can't guarantee it will definitely work for you. But I know it has worked for me, and for many people I know, so I strongly feel that it will also work for you.

How to Reach Hard Goals?

1. Know your end result. 

2. Have clear step-by-step plans. 

3. Always see your progress. 

In order to help you do exactly these three things to accomplish your goals. GoalsOnTrack is designed to it. To learn and know more, Click Here.

Six Motivational Techniques for Managers

HR specialist and writer, Dennis Phoenix, suggests six motivational techniques for managers.

Any manager knows that a motivated team is a productive team. The success of any business is dependent on the motivation of its employees. Happy and engaged employees invariably lead to productivity and profit. Unfortunately, motivational techniques are anything but an exact science. What works for one individual doesn’t for another.

It is critical for a manager or small business owner to find out what motivates their team. In many cases, it boils down to getting to know each employee on an individual basis. Some are motivated by money alone, some prefer recognition and others are motivated when they feel valued.

 

Six motivational techniques for managers

Communicate

It is said that good communication is the number one factor in any good relationship. A leader must always be approachable and accessible. In other words, keep the door open. Spending time with employees on a one to one basis will put them at ease and alleviate uncertainty. It will also give the manager keen insight into what motivates each of his employees.

 

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