The old adage chides us that 'what gets measured gets done.' So if we want profitable businesses with growth, then what is measured, why and how?

Key Performance Indicators (KPI's) are metrics that help an organization define and measure progress toward goals. We must assume that the strategy for the company has been established and the individual goals have been defined. Your goals should have the following components including direction, benchmarks, targets and a time frame and then the KPI's are used to measure progress. An example may be to increase sales by $2 million in a particular market by your fiscal year ending 2009. The environment must be properly set in order to use the KPI's. You need to assure that there is a set of predefined business processes along with quantitative and qualitative measurement of results and comparisons with set goals. To sustain this initiative there must also exist methods to investigate and identify variances and a tweaking process or resources available to achieve short terms results.

To identify and define what may be your KPI's, there's an acronym available to prompt the thoughts and questions: SMARTER. The indicators to be measured need to be significant, measurable, attainable, realistic, time-framed, exciting and rewarding. Expect to have a different set of KPI's for measuring services versus manufacturing processes. The key words may vary a bit but the message is consistent. What are we supposed to be doing and are we performing in an acceptable time frame and what are the rewards and benefits? Some programs do not include the last two indicators of exciting and rewarding but I think these are vital to add as they are tied to the compensation and bonus system of the company. Here's a great way to tie in the interest of the workers (increased benefits) to the performance of the company overall. The motivation of the top management (profitable performance for the stockholders) will be aligned with the rewarded behavior of all associates.

Before you try to set the measurements, consider that the company must have the key tangible and intangible assets and abilities to support accomplishment of the mission. You can't do the job without the tools or training. The required assets, skills and capabilities are also known as 'core competencies.' In your assessment, does your company management possess the capability to effectively deploy these assets to support attaining your goals? These assets can be existing or they can be acquired. The ability to transform the resource into tools of accomplishment will define your success. Using the KPI's will give you regular and valuable feedback to confirm your correct course of action (effectiveness) and the level of performance (efficiency.) All profitable businesses need success in both areas. You must be doing the right things in the right ways.

A firm can secure the required assets and competencies in four ways. First, the resources may already be part of the business as established by its history. Greco Apparel started as a 'cut, make and thread' domestic contracting operation in 1951. Today, the labor is the base part of manufacturing services we offer. Second, you may acquire the assets on the open market. Our company added the ability to supply product development when we purchased a Gerber Accumark system for CAD CAM. We added the ability to supply 'full-package' including fabric by hiring a key person familiar with fabric sourcing.

Third, you can increase your capability by sharing competency with a vendor or alliance partner. Greco Apparel works with contract cut and sew operations in various product lines. One of our lines is security shirts which require automatic equipment for quality results. Our selected vendors contribute the necessary machinery and technical know-how to our operation. And fourth, the required asset may be the result of learning over time through doing. Initially the only trim or component item that Greco Apparel supplied was thread. Over time, our clients required (demanded) that we supply all trim items. Purchasing capability and expanded vendor relationships were amassed to support this necessity.

Once you are confident that your strategy is defined and the accomplishment will further your success and that you have the assets in place to support the endeavor, you can now set your measurements. If you are the business owner and chief executive, you may want to establish or consult your board of advisors or board of directors to help in monitoring your success. You need the objectivity as an owner won't typically hold his or her own feet to the fire. It is too easy to make excuses or lose perspective especially if you serve in a key role with regular operational responsibility. You don't want to devolve because you don't have to answer to anyone. Your hard work should pay off when you have made your investments and you make your assets work, by measurement, to return attractive benefits.

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Joseph Greco is president of Greco Apparel. Visit them on the web at www.grecoapparel.com