How Does Your Company Keep Score for Ag?

 

September 10, 2020

We live in a world of scoreboard watchers. Go to any sporting event, and you’ll see massive scoreboards displaying all sorts of stats and information. Political junkies love to look at maps of red and blue states and counties. The United Way and other nonprofits proudly display thermometers showing their fundraising goals and accomplishments.

In recent years, businesses have caught on to the way people are wired for keeping score and are displaying more and more information to let their employees know how the company is doing.

Before it closed down, Marty Fox had the opportunity to tour the massive NUMMI plant in Fremont where GM and Toyota were manufacturing vehicles, including the Toyota Tacoma pickup. In the assembly-line area, giant electronic scoreboards continually reminded workers of the goals for their shift and how they were measuring up to those goals. On display in a centralized room, dozens of charts showed employees and teams how they were doing in specific areas and how their performance compared with that of other company teams.

Metrics provide real-time feedback on activities that are critical to your company and can help predict future outcomes. Simply put, metrics (sometimes called key performance indicators, or KPIs) serve as indicators of progress toward specific goals, or critical success factors (CSFs).

 

Examples are:

CSF (Goal)

KPI (Measurement)

Improve gross profit

Increase gross margin to 35%

Increase yield per acre

Increase fertilizer output by 5%

Put management succession plan in place

Complete buy-sell agreement by December 31

Reduce emissions output from machinery

Measure gas usage each quarter to remain on target to decrease total gallons of gas used in a year

Improved experience rating in Workers Compensation

Increase # of days without incidents

Increase cash flow

Reduce A/R days outstanding to 30


Before you design your metrics, lay the groundwork for what you want to achieve. In other words, if you achieve good outcomes against your metrics, will you produce the results you’re looking for? For example, you may have a goal to increase cash flow by 20%. If you select a production target or increased yield per field as your KPI, you better be sure that increasing production or increasing yield per field will produce more cash flow. (HINT: It doesn’t always work out that way.)

 

So, how should you select the most impactful metrics (KPIs) for your business?

  • Establish your company’s vision, strategy, and goals for the future.
  • Determine the accomplishments that are critical to achieving those goals (your CSFs).
  • Select at least one metric that will have a positive impact on each CSF.
  • Assign a target for each KPI.

 

Here are a few more helpful tips:

  • Select only a few metrics to closely monitor.
  • Make sure everyone clearly understands the metrics and how they can drive improvement.
  • Tie them to actions that people can influence.
  • Keep them simple. The data should be easy to collect and communicate.
  • Report on them regularly and openly.

Every business owner today has a mountain of information available to them. The hard part is filtering through it all to figure out what has value for your company. At the end of the day, a performance measurement system helps you see issues before they become problems. Whether you would like us to facilitate a full-day strategic planning session, or you just want some guidance on getting started, you can count on us to help you gain greater insight and direction for your business.

For more information about how we can specifically help your business, please don’t hesitate to contact us (contactus@gccpas.net) or call 209-527-4220.

 

 

200 West Roseburg Avenue
Modesto, CA 95350

(209) 527-4220 (phone)
(209) 527-4247 (fax)

https://www.grimbleby-coleman.com/resources/articles/238

×

Fill the form below and we'll contact you to schedule an appointment:

Denotes Required Fields
First Name
Last Name
Email
Phone
How can we help?

Our Commitment to Safety and Prevention of COVID-19

Dear friends and clients,

Thank you for putting your trust in us to provide your tax and advisory services. These are rare and unusual circumstances; but be assured, we are committed to providing continued services and support over the coming weeks.

To lessen our societal impact, as well as to protect the well-being of you, our clients, and our team, we ask that the majority of our communications be electronic or over the phone (we have rescheduled all meetings to be handled in this way).

At this time, our office is closed to the public. You may drop off paper documents in our mail slot. We strongly encourage you to use our electronic collaboration tools for securely scanning and sending tax documents and we have the necessary data security in place to ensure security and privacy.

To read our January letter detailing our electronic collaboration tools, and specific instructions, click here. We are happy to assist in the set-up of any of these applications, if you have not used them in the past; contact our Admin team at the phone number or email below.

GC looks forward to normalizing our processes as soon as safety dictates. Be well and take care of yourselves, your community, and your loved ones. We are here for you professionally and personally, so do not hesitate to reach out.

All the Best,

Clive Grimbleby, President
Grimbleby Coleman CPAs
Certified Public Accountants, Inc.
(209) 527-4220
contactus@gccpas.net

 

Close