What Are Your CSFs?: Are you Measuring what Really Counts? by Charles Waldo

Years ago, when just out of Saint Louis University’s B-School, I worked for a mid-sized, publicly-traded company in St. Louis. My desk happened to be near the office of the president, an imposing, rather gruff character. He had the habit, when walking through the building, of randomly stopping at an employee’s desk to ask “What was yesterday’s stock price close? Was it up or down from the day before?”

CFS FactorsI don’t believe anyone ever got fired for not knowing the answers but they did get “the look.” Employees (including me!) were terrified of being asked and not knowing so most everyone kept their eyes focused on these two figures. The president even had bulletin boards all over the building with the two figures updated every morning, so there was no excuse for not knowing.

I asked my boss, a division general manager, why the president did that. He said the president felt the most common corporate performance denominator all employees could relate to was the stock’s daily price. He wanted all eyes focused on it all the time. One could argue about the validity of his view but the daily stock price was THE primary Critical Success Factor for him and, therefore, for us. At my initial low level entry position I had almost no effect on the stock’s price but, nevertheless, was focused on it. As time passed and promotions came I saw the potential usefulness of CSFs, came up with several for my units, and tried to get all eyes trained on them. They seemed to work.

How about you? Do you have Critical Success Factors that you focus on constantly? What are the “make it or break it” results for your organization? For your part in it? What about for your personal life? What spells “success?”

Characteristics of a Critical Success Factor:

  • It’s a collective performance factor or result that is extremely important to organization success. Perhaps even a “make it or break it” result.
  • Performance results can be gathered relatively easily, quickly, and accurately.
  • The CSF is understood and its importance widely recognized by employees.
  • It does not track or identify individual employee’s performance.
  • While most organizations typically use many performance measurements, CSFs should be limited to a relatively few (3 – 7) so all eyes can be constantly focused on them.
  • The organization must be able to affect its CSFs. For example, the organization might be strongly affected by macro-economic trends such as the Gross National Product but probably can’t do anything to alter the GNP. Customer repeat visit frequency or product defect rates would be CSFs the organization can affect.

An example

Let’s look at what CSFs might be appropriate for a sit-down restaurant and how they could be measured. I’ve never run a restaurant but have eaten in many. These CSFs seem almost self-evident:

  1. Sales volume and trends (easily tracked by receipts)
  2. Increase in size of the average bill, especially with high profit, add-on items (servers make bigger tips and the restaurant’s volume and profitability probably rises)
  3. Customer repeat visit rate (the lifeblood for most organizations)
  4. Customer happiness rating (happy customers are likely to return and tell others)
  5. Customer suggestions for improving their happiness (they usually see things from a different perspective than management)

One way to get the # 3, 4, & 5 CSF’s data

Print a half page card which servers hand to customers with their bills, asking them politely to fill it out and leave at the table or turn in to the hostess or cashier. Provide a nice (but inexpensive) pen with the restaurant’s name on it as a thank-you for completing the survey (everyone likes to get something for free). Maybe also give a coupon good for a freebie when they return…. non-alcoholic drinks; desserts ; a 10% discount; kids eat free; etc.

Ask:

Dear guest(s):
We appreciate your dining with us today. So we can serve you better, would you please answer the following questions? Leave the card at the table or give to the hostess. Please keep the pen and gift coupon as our thank-you. Thanks, have a great day, and we look forward to seeing you again soon.
(Signed)
John Doe, Manager (include phone # and email/text addresses)

  1. Have you (or any in your party) dined with us before? Yes__ No__ (measures repeat customers)
  2. All things considered, using a scale of 10 to 0 where 10 is Very Happy and 0 is Miserably UNhappy, how happy are you with today’s experience with us? ______ (measures customer satisfaction)
  3. What suggestions do you have that would have made today’ visit Happier? (Get customers’ ideas)
  4. If you will give us your name and email address we will be happy to send you periodic notifications of specials and fun events. (Obviously, the restaurant must have social media marketing capabilities and offer specials.)

Aggregating customer responses

It should be fairly quick and easy for the manager or a designated employee to tally up each day’s totals for each question. Use simple charts or numerical listings to share with employees. Nothing fancy. For example, assume question 1 showed that, in a two week period, 20% of customers were repeaters. Perhaps set a goal of 30% in three months. Then develop tactics and strategies that might accomplish that target. Measure results.

One of the first rules of effective management is prioritizing goals and issues, with the most important ones first. That’s what Critical Success Factors are: Determining then measuring on an on-going basis the relatively few REALLY important factors vital to organization success. All performance factors are not created equal, with the “80-20 Rule” valid in many cases. now your numbers and focus improvement efforts where they count the most.

Good luck.
Charles Waldo