Every responsible CEO looks for indicators that will help identify potential problems in his or her business. Most prefer data-driven metrics because they provide objective evidence of a coming trend or potential problem. A spike in inventory is a reliable indicator of an imminent sales decline. A drop in Net Promoter Score signals trouble with customer loyalty.
As reliable as those metrics are, by the time they appear in a CEO’s dashboard, the problem may be too far along to prevent. The best indicators are those that provide the earliest warnings possible. For instance, one of the best early predictors of a financial downturn is employee morale.
One company I’ve worked with is famous for industry-leading financial results and employee satisfaction. During a semi-annual employee survey, they noticed a slight dip in a particular area of the survey. Employee confidence dropped from “extraordinarily high” to “not-quite-as-extraordinary-but-still-light-years-ahead-of-most-competitors,” which would have left most executives resting easy or even continuing to boast about the result.
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