A Few Key Ratios They Don’t Teach You in Business School

A Few Key Ratios They Don’t Teach You in Business School
“The most important thing is to try and inspire people
so that they can be great in whatever they want to do”
– Kobe Bryant

Key performance indicators (KPI’s) are a necessity for running a successful business. They focus on company productivity, finance, operations, marketing and of course the “bottom line”. Properly constructed they give an accurate “snap shot” of how the business is doing over a specific period of time.

Another set of ratios that are just as important as KPI’s, are centered on people. These have to do with how you work with your team in responding to company issues and opportunities, including those surfaced by your business KPI’s! However, these are seldom taught in business school, and their importance is often overlooked by both new and seasoned leaders. Here they are:

1. Inquiry to Advocacy – 3/1 – Resolving issues is a constant activity for leaders; and deciding how to best do that is a decision every leader has to make. Most successful leaders agree that engaging their teams in problem resolution and opportunity development improves quality decision making and, most importantly, decision buy-in! Lesson – ask three questions (Inquiry), for every suggestion or point-of-view you have on an issue (Advocacy).

2. Positive to Negative Feedback – 3/1 – Research has shown that most people need positive feedback to perform their best; and more positive feedback than negative (in the range of 3-to-1 or better). Leaders who frequently express their sincere appreciation for the skills and talents of the people they work with, discover that their teams are both happier and more productive. Lesson – give more positive feedback every day!

3. People to Process – 3/1 – Continuous improvement is a common goal in thriving businesses; and leaders are always looking to make company processes more effective.  However, an effective process is only as good as the people who plan, organize, direct and own it – without people, there is no process. Lesson – when analyzing and improving a process, put people first.

KPI’s, customer metrics and company scorecards are all required for businesses to “stay on top” of results. Making the business even better, requires connecting with the people who produce the results. Keep your leadership ratios positive, and people won’t let you down!