Three Ways To Take Your Companies Pulse

Three Ways To Take Your Companies Pulse
February 16 17:03 2016 Print This Article

As a small business leader, whether you’re running a tech start-up, a retail store, or a chain of restaurants, you likely have your own set of “vital statistics” for each operating unit in your organization. These vary across every industry, job function, and company. If your product is an app, it might be Average Revenue Per User. If you’re managing sales, it might be Cost Per Customer Acquisition. For a marketer, it might be unaided awareness. Or if you run a team of waitstaff, employee retention might be important to you. You track these metrics to see when performance is slipping — and signal when it’s soaring. 

But what are the best universal metrics you can look at to get a sense of your company’s overall health?

If I had to pick three key indicators that really work, I’d say employee engagement, customer satisfaction, and cash flow. These measurements won’t tell you everything you need to know, but close to it. They get right to the guts of a company’s overall performance, now and in the future.

Employee engagement first. It goes without saying that no company, small or large, can win over the long run without energized employees who believe in the mission and understand how to achieve it.

That’s why you need to take the measure of employee engagement at least once a year through anonymous surveys in which people feel completely safe to speak their minds.

But watch out. Don’t fall into the common trap of letting these surveys devolve into questionnaires about the little stuff, such as the tastiness of the food in the company cafeteria or the availability of spaces in the parking lot. The most meaningful surveys probe how employees feel about the strategic direction of the company and the quality of their career opportunities. They ask questions such as these: Do you believe the company has goals that people fully grasp, accept, and support? Do you feel the company cares about you and that you have been given the opportunity to grow? Do you think that your everyday work is connected to what company leaders say in speeches and in the annual report? The best employee surveys are getting at one question: Are we all on the same team here?

Growth is the key to long-term viability, which is why customer satisfaction is the second vital sign for general managers. Again, this measurement can be obtained by surveys, but those are rarely enough to give you the gritty data you need for a real read of the situation. No, you need to make visits. And don’t just chat with your “good” customers.

See the ones whose orders are inconsistent or dropping—the ones your salespeople don’t like to see themselves.

Make these visits about learning. Find a dozen ways to ask: “What can we do better?” And don’t leave without finding out if each customer would recommend your products or services. That’s the acid test of customer satisfaction.

Finally, there’s cash flow, which is valuable because it just does not lie. All your other profit-and-loss numbers, like net income, have some art to them. They’ve been massaged through the accounting process, which is filled with assumptions. But free cash flow tells you the true condition of the business. It gives you a sense of your maneuverability—whether you can return cash to shareholders, pay down debt, borrow more to grow faster, or any combination of these options. Cash flow helps you understand and control your destiny.

Without doubt, there are lots of ways to measure the pulse of a business. But if you have employee engagement, customer satisfaction, and cash flow right, you can be sure your company is healthy and on the way to winning.


  Jack is Executive Chairman of the Jack Welch Management Institute. Through its online MBA program, the Jack Welch Management Institute transforms the lives of its students by providing them with the tools to become better leaders, build great teams, and help their organizations win. He is co-author, with Suzy Welch, of the new book, The Real-Life MBA — Your No-BS Guide to Winning the Game, Building a Team, and Growing Your Career, which debuted as a #1 Wall Street Journal and Washington Post best-seller.