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Good Business Planning Adds Accountability

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It’s much easier to be friends with your coworkers than to manage them well. Every small-business owner suffers the problem of management and accountability. Good business planning adds accountability via goals, metrics, and tracking.

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Lean business planning sets clear expectations and then follows up on results. It compares results with expectations. People on a team are held accountable only if management actually does the work of tracking results and communicating them, after the fact, to those responsible.

What gets measured is what gets done

Metrics are part of the problem. As a rule, we don’t develop the right metrics for people. Metrics aren’t right unless the people responsible understand them and believe in them. Will the measurement scheme show good and bad performances?

Remember, people need metrics. People want metrics. You and your business need metrics. Good business planning adds to accountability.

Then you have to track. That’s where the lean business plan creates a management advantage, because tracking and following up is part of its most important pieces. Set the review schedules in advance, make sure you have the right participants for the review, and then do it.

What gets measured is what gets done

Good teams pull together

In good teams, the negative feedback is in the metric. Nobody has to scold or lecture, because the team participated in generating the plan and the team reviews it, and good performances make people proud and happy, and bad performances make people embarrassed. It happens automatically. It’s part of the planning process. Besides, guilt and fear tactics are the worst kind of fake management.

And you must avoid the crystal ball and chain. Sometimes — actually, often — metrics go sour because assumptions have changed. Unforeseen events happen. You manage these times collaboratively, separating the effort from the results. Your team members see that and they believe in the process, and they’ll continue to contribute.

Business Plan Metrics

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Developing business plan metrics is a critical part of  developing accountability as one of the principles of lean planning:

Lean business planning sets clear expectations and then follows up on results. It compares results with expectations. People on a team are held accountable only if management actually does the work of tracking results and communicating them, after the fact, to those responsible.

Business plan metrics
metrics for business planning

“Metrics” is my favorite word for performance measurements that you track as part of your regular planning process. They are numbers people can see and compare. Make them explicit as part of your lean plan. Show them to the management team as part of the planning and then show the results again and again during your monthly review meeting. Management often boils down to setting clear expectations and then following up on results. Those expectations are the metrics.

Business Plan Metrics You Can Use

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The most obvious business plan metrics are in the financial reports: sales, cost of sales, expenses, and so on. Most people in business understand how assigning specific responsibility for those financial numbers, and managing those numbers closely, builds accountability in a business. Those are classic performance metrics.

However, with good lean planning, you can look for metrics throughout the business, aside from what shows up in the financial reports. For example, marketing is traditionally accountable for levels of expenses in the financials, but also generates metrics on websites, social media, emails, conversions, visits, leads, seminars, advertisements, media placements, and so on. Sales is traditionally responsible for the sales reports in the financials, but there are also calls, visits, presentations, proposals, store traffic, price promotions, and so on. Customer service has calls, problems resolved, and other measures. Finance and accounting have metrics including collection days, payment days, and inventory turnover. Business is full of numbers to manage and track performance. When metrics are built into a plan, and shared with the management team, they generate more accountability and more management.

The illustration below shows simple performance metrics for a bicycle store sample lean plan:

Performance Metrics

Developing the metrics required to bring your people into the planning process is very important. Involve the team in deciding what metrics to use. The people in charge often fail to realize how well the players on the team know their specific functions, and how they should be measured.

Of course the starting expectation numbers alone aren’t enough. For real accountability, management revisits those numbers regularly, to track progress and make people accountable for results. This is a critical part of planning as steering the business and planning as management.