What gets measured gets done – set your 1% challenge!

What gets measured gets done – set your 1% challenge!

The only way to improve is to know your starting point, set a goal, then measure tasks and performance that lead to that goal. Whether in business or on the sporting field, winners know and understand this.

Many years ago now and reasonably early in my management career whilst working for a very successful global multinational, we were set an objective: the 1% challenge. As we (in our own minds at least…) were already at peak performance (and we were compared to everyone else in our industry), telling everyone in the business that we were going to double our net profit over the next two years would have gone down like a lead balloon – especially on the back of having improved our results on a compounding basis for many years already. So instead, the 1% Challenge was a simple and measurable way of involving all sides of the business with achievable objectives that were easy to get buy-in to. Increase sales and GP 1%, reduce manufacturing cost 1%, reduce raw materials requirements 1%, you get the drift. Many businesses make the mistake of trying to achieve profits by either cutting expenses, or counting on sales growth, but this strategy involved everyone in the business: sales, manufacturing, marketing, human resources, no one felt left out.

As I’m sure you guessed, we achieved the goal ahead of schedule. This is really management 101 stuff, but it’s surprising how often even large entities are totally lost in setting goals, let alone implementing a plan to achieve it. Like in this example:

I had heard of the $1.6 million report that the Qld Government paid KPMG to compile that was supposed to show what the improvements had been from the extra 20,000 public servants at a cost of $1 Billion per year. It is also understandable why the report was hidden away for over a year. The report struggled to find any improvements for two reasons: very little outcomes in Qld Government get measured; and of those that do get measured, there was no measurable improvement with many in fact declining. The only statistically relevant “improvement” was a 35% increase in breaches of domestic violence protection orders (presumably from the changes in legislation to make it easier to report, more so than actual Government action), and 18% increase in drink driving offences. Education and Health went backwards. The data in the report is now old because it was not publicised for so long, but it is also quite embarrassing that the report recommendations could have been lifted straight out of any number of introductory Management textbooks:

  1. Define Priorities
  2. Report Publicly
  3. Drive Collaboration and Improvement
  4. Create Clear Roles, Accountabilities and Responsibilities

Such basic recommendations would be laughable if it wasn’t so serious. Governments response? In this year’s Qld Budget papers, they discontinued 90 performance measurements. Nothing important, only things like how long it takes bureaucrats to respond to the public because it does not “meet the definition of neither effectiveness nor efficiency”. Really. They also stopped measuring projects managed, facilitated or delivered within committed time frames and budgets. That’s one way to address underperformance.

To achieve anything, first you need to know your starting point, then where you want to get to, before you can work out how to achieve it. It can also be summed up with the response when a tourist asks a local Irish gentleman for directions to Aberdeen: “well sir, if I were you, I wouldn’t be starting from here…”

Businesses of Tomorrow

As household’s struggle with increasing costs of living, there is rightfully pressure on businesses to address what has been low wages growth for about 6 years. Westpac have started a “Businesses of Tomorrow” program which seeks to support companies to drive change. Their study found that the biggest drag on Australian corporates was not tax (although it was up there), with Australia destined to be the second least competitive tax environment in the developed world by 2020 (ahead of only Germany). The biggest drag is regulation. Rather than any one individual regulation, it is the cumulative impact and the constant change that is the issue. According to a Deloitte study, government regulations costs businesses $94 Billion per year, more than the combined Government spending on healthcare, transport and communications. That’s $94 Billion of unproductive money spent by businesses, money that could be used to pay employees more or for business improvements.

Take employment related rules for instance: there are national and state regulations around work health and safety, hiring, firing, and penalty rates that all vary. Even working out what to pay someone is complicated with 122 awards, each one split into hundreds of pages of classifications and clarifications.

In the USA, they have 10 days of paid leave per year, plus 10 public holidays. Not accounting for differences in the 122 awards etc, in Australia we have:

20 days annual leave

12 days of Public Holidays

Up to 10 days sick leave

5 days long service leave per year of service (accrued, payable after 10 years)

Up to 5 days of Domestic Violence Leave (from 1st of August, unpaid)

Up to 2 days bereavement leave

Several sectors have a 9-day fortnight, effectively giving another 26 days leave

Qld Government Public sector has just been granted up to 20 days disaster leave, and now we have Victorian Women’s Trust advocating for an additional 12 days per year for all women for period pain.

The above points are purely listed as an example of how many small requirements quickly add up to a large burden on businesses when combined. If you add all the above together, we’d have over 80 days off (plus 12 for women plus any Government disaster days), plus another 104 days for weekends. The last time I checked, there are 365 days in a year, so technically we could be off more than half the year! Whilst it’s unlikely anyone would have all these days, it wouldn’t stop a few from trying, and showcases the cumulative effect and why Australia is becoming uncompetitive by world standards.

RDW supporting Buy a Bale (drought relief appeal)

Australian farmers, many of them valued customers, have now endured many years of Australia’s drought cycle. Those without access to irrigation are certainly feeling the pinch. Our very own Peter Muirhead took up the cause and started a company fund raiser to support the “Buy a Bale” initiative, and we are very pleased to see that our employees and company together raised $16,240!

Together with our prayers and rain dance impersonations, our farmers will be receiving the equivalent of over 800 bales of hay through the foundation, which we hope helps see them through that little bit closer to the end of the drought. Please feel free to join the campaign by donating to https://www.buyabale.com.au/donate/ .

As always, onwards and upwards!

Fred Carlsson

General Manager

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