Measurements are one of the most critical parts of effective management.  Using the right measurement often is the basis for getting the desired actions that lead to the desired results.  The legendary example of Ann Taylor implementing  a strict analysis of Items per transaction and dollars per transaction and using it to assign the most productive to the busiest hours comes to mind.  What seemed like a good idea turned disastrous. The staff that spent the most time nurturing and serving a customer was not the most productive and many left the company.  Without controls people were intruding and stealing customers and sale from one another.  The idea undermined teamwork and profits.

Measurements can be as bad as they are good.  It is important that the measurements are valid, fair and used in an effective manner to help people improve and grow and not punish.  All ramifications must be considered before implementing a measuring tool.  Once the tool is in place, managers must instruct and coach employees in the right ways to improve the measure.  JUST getting the numbers up may be counterproductive.

Even after you have an effective measure, review that measure quarterly.  The measure may have been great last year but now it is not effective.  For example, in December 2008 when the retail economy changed and stores took markdowns in November, many of our retailers noted that the dollars per transaction was the same or higher but the traffic was way down.  That should have been a clarion call to those retailers to shift the measurement.  Maybe the number of calls made to customers per day or the number of people they can draw into the store in a week would have brought better results than measuring units or dollars per transaction.  Whatever the situation, a steering team is a vital part of finding the right measure, identifying the ramifications, implementing the tool and using the data to assure that the right results  hit the bottom line.

2009 will certainly be different that 2008 but the right attention to the numbers and measurements  will allow retailers to prosper.  Certainly inventory planning is the basis for many of the metrics.  Resolve to use at least two of those metrics in ways that you didn’t last year and you will improve performance. The metrics are not just for the buyers but for the sales staff and admin groups too.