Trigger points provide the key to changing your company’s performance levels
There’s nothing wrong with having “hope,” but clearly “hope” is not a business strategy, a fact that’s become very evident in recent history, given these tough economic times. Nationwide, company owners who’ve casually relied upon “hope” as a viable way to manage or turn around business have suffered serious professional consequences. Some have faced cutbacks in terms of services, products and staff; others have closed their doors for good.
Fortunately, there is still “hope” for countless other leaders who are looking for a simple but powerful way to measure the health of their business. The strategy is based around setting “trigger points,” which are measurements specifically created to signal important changes in critical performance levels. Trigger points are established to align with a company’s Vital Factors, the specific, key indicators of a business’ health. By monitoring trigger points, leaders can take immediate corrective action and avoid the serious consequences of not acting quickly enough.
So, what do trigger points look like, and how do they work? There’s a perfect example in the story of what happened to a prominent Big Ten football coach a few years back. After a miserable losing streak, the university had some decisions to make about whether or not to keep the head coach on board, so they brought in an interim athletic director to help. At this point, there were four games left in the season, so the interim athletic director set performance triggers in place. If the coach won all four games, they would move forward, keeping him in charge. If he lost one game, corrective action would be necessary. If he lost two out of four, he could expect serious consequences in terms of his job security, and if he lost all four, the head coach would need to get his resume together immediately.
Under the leadership of this Big Ten coach, the football team lost the final four games of the season. When the coach was fired, the interim athletic director held a press conference, at which a reporter asked him if the coach had been surprised about being let go. The answer was “No.” The process of setting these performance triggers in place had removed the subjectivity out of the issue, established expectations, and made it very clear what consequences there would be for either success or failure.
When a company follows this lead, it’s the management’s responsibility to develop effective corrective actions attached to the trigger points. Doing so eliminates the emotion that can come when goals are not met. Companies should set five to seven performance triggers that are focused on the most vital areas of their business. Examples of company triggers include revenue, profit, cash flow, customer satisfaction and employee retention.