Your monthly management accounts don’t capture many of the important events in your company each month. Measures like BOTTOM LINE PROFIT and RETURN ON INVESTMENT only show how your company is doing in the areas of continuous improvement and innovation, a number of accounting months after you spend the money. When you judge your managers on their short term financial performance against budget , they may hold back investing in long-term projects important for long term survival and success. Sharing knowledge, signing up new customers, and developing new products, are long term investments but financial accounting treats these items as expenses.
No single measure, financial or otherwise, can work as a universal performance target. Managers need multiple targets which balance financial and operational measures. Challenge your management team to measure themselves against these eight key performance areas each month:
- Market position
- Employee attitudes
- Public responsibility
- Personnel development
- Product leadership
- Balanced short and long-term goals
“The Hidden Balance Sheet” shows you how to measure, manage and grow the priceless resources on your hidden balance sheet. Learn how to manage the six capitals (physical, financial, employee, structural, relationship and environmental) and convert your knowledge assets into real wealth.
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