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5 Continuous Improvement Metrics That Your CEO Actually Cares About

Posted by Allan Wilson

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Feb 17, 2015 11:11:00 AM

9962489446_a06c3b2d08A lot of people think of the CEO as the top of the ladder, accountable to no one. But just like the rest of us, a CEO has a management group to whom he or she reports. That management group could be a board of directors, or an investment group - or in some cases, a combination of both.

What do CEOs care about?

A CEO is primarily measured on their ability to increase shareholder value (the value of the business in the general marketplace).  So what matters to a CEO? Ultimately, anything that will impact shareholder value.

Before we dive into some of these metrics, we must first differentiate between a process and a “product.”  The “product” is what the company or organization produces, whether that's a tangible item or a service. An automobile company produces cars and provides warranties, so they have two “products:” the cars they produce, and the services they provide to support those cars.

Then there is the process that an organization or company uses to produce the product (again, remember this can be a service, too). Continuous improvement activities can (and should) be used to BOTH improve products and the process to produce these products.

What continuous improvement metrics actually matter to your CEO?

  1. Quality

    Poor quality has a direct negative effect on shareholder value, as customers will be disappointed and growth in company revenue will be adversely affected. This could be the quality of the product – the metric in this case would be the number of warranty claims being made, or product failures in the field. It could also be the quality of the service being delivered – for example, if the engineer cut corners in repairing the product or, in a hospital, the wrong drug was provided to the patient.

    The quality of the process also matters. The product might have worked fine, the engineer did the field repair just fine, but the process of doing all of this was very inefficient and time consuming and the customer was disappointed.

    If you can prove that your improvement work is directly impacting the quality of your products and processes, you can be sure that your CEO is going to pay attention.

  2. Employee Turnover

    Employee turnover is expensive and demoralizing, and is often the result of disengaged employees. Employees that produce low-quality products using broken processes are a lot more likely to leave the organization (or perform so poorly that they're asked to leave), as a result of low morale. Engaging staff in continuous improvement sends a message to employees that management is serious about improvement. Empowering them to implement positive changes in their workplace is sure to improve morale, increase the personal investment employees have in the company, and reduce turnover.

  3. Sales and Revenue Growth

    It's pretty obvious how continuous improvement can impact this metric. If you're improving products and processes, logically you're gong to be increasing sales and revenue. Common reasons sales and revenue suffer are: 

    - The company is losing customers to competitors.
    - New customers are not being found
    - Poor reputation in the marketplace for quality.

    A CEO will be very interested in supporting continuous improvement activities that hone in on these problems and direct a concentrated effort toward turning around those trends. Whether you're engaging employees in finding new ways to beat out the competition, appeal to new customers, or improve the quality of your products, capturing the financial impact of your efforts to share with your CEO will definitely increase their support for your efforts. 

  4. Ideation and Innovation

    More and more CEOs are being measured by the level of innovation in their organizations, and the success of that innovation in opening up new markets or out-thinking the competition (not sure about the difference between innovation and improvement? Read this). Engaging your entire organization in continuous improvement is going to increase the likelihood that innovative ideas emerge, and your CEO will love that. 

  5. Customer Communities

    More CEOs are focused on customer retention then ever before. The internet has virtually eliminated what used to be called “stickiness” where customers would be loyal to a particular brand and stick with it. Consumers have access to more options and more information, causing them to challenge traditional brand loyalties. 

    CEO will be interested in continuous improvement of processes to increase customer loyalty and reduce customer losses to the competition.

There's my list - what's on yours? What continuous improvement metrics do your CEOs care about? And if you ARE the CEO, what metrics do you want to see from your continuous improvement teams?

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Topics: Leadership

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