Key Performance Indicators (KPI)
Once asked the boss of a neighboring company in Pennsylvania how his business was doing. Since his business was steel products manufacturing, I expected a negative response (public news at the time was that the U.S. steel industry was suffering).
His upbeat answer was surprising. He said his business was great and profits were higher than ever; in fact, setting new records every month. In response to my asking his secret, he said was a simple matter of aligning company and employee outcomes. After obtaining bargaining unit (organized labor) cooperation, he had established a profit-sharing structure applicable to incremental production and involved his factory teams in continual process re-engineering. As result, his company set new production records every month and a portion of the profits (after warranty service costs) flowed back to the employees.
He said his business was great and profits were higher than ever; in fact, setting new records every month. This was a powerful lesson to me at the time, while relatively young and still learning to walk in the shoes of management. In the 30+ years since, have promoted this approach elsewhere and found it to be effective. Goes by different names now...such as goal alignment, cascading KPI’s, etc. While no business principle is always right, this one seems at least to be a general rule.