Trigger points provide the key to changing your company’s performance levels
For instance, a manufacturing company wanted to set up trigger points, and one of those trigger points was related to revenue. So the CEO decided that if revenue fell below $2.5 million two months in a row, the trigger would “turn on,” alerting everyone in the company that immediate corrective action was necessary. In the case of this particular financial shortfall, the options for corrective action included increasing sales goals, cutting overhead or a combination of the two. After two months, the benchmark was not achieved, so corrective action was taken to increase sales goals. Then revenue suffered a third month, so the CEO eliminated overhead by cutting back on staff. As a leader, this CEO had to look for solutions that would protect profits and maintain business viability. Of note, he could have opted to take no action – a decision that’s an action in and of itself – however, this can be the riskiest decision that a leader makes.
Although many companies may set expectations around their Vital Factors, where they fall short is putting in place these important trigger points, which put the leadership on alert and force a decision point. Yet without trigger points, it’s impossible to know when to be proactive and how your company is truly performing. Running a business without trigger points in place is also highly stressful because when the “hope” fails, which it will at some point, the floor drops from under you. That’s scary to say the least, and everyone knows that the biggest mistakes are often made when you’re fearful, under intense pressure, or facing major time constraints.
Even though the economic downturn has exposed the fact that countless companies have used “hope” as a strategy for operating business, it’s also been a major game changer. Savvy business leaders are modifying company systems and management behaviors, putting tools in place that really work. As mentioned, performance triggers should correlate to major Vital Factors, but they should also be designed to work on the micro level, such as with specific projects and programs.
Like the alarm system you “wished you had installed,” performance triggers may have been something you’ve overlooked in the past. And you’re not alone if that’s the case — many other company heads haven’t recognized the need. But now you know why they’re crucial to a company’s livelihood. Putting trigger points in place today could be the best small action you might ever take to save your business from crisis and drive it into a permanent position of success.