Measurement of performance

As anyone who has been reading my Thoughts for the Weekend for the past few months knows, as a child I was pretty much obsessed with sports. I still am, I guess.

Being a bit of a numbers geek as well, I would survey the league tables, statistics, goal-scorers and even attendances of all the Saturday football matches. Each season Shoot magazine would produce a cardboard league table board. There was a small piece of card for each team that you would slot into the right place in the league table. So Sunday morning would always involve me moving teams around depending on whether they had gone up or down the various tables.

But it wasn’t just football that I was fascinated with. It was pretty much every sport.

One strange anomaly from those days was the “Rugby Union merit table”. This was an invention of the Sunday Telegraph and in the 70s involved them collating the results of what were essentially a season’s worth of friendly matches into a league table of some kind.

Except it wasn’t a league table really. Some teams played more matches than others, so they had to create their own points system and score it based on averages. Some teams played each other twice and some didn’t play each other at all. You could come top by just playing weaker teams and avoiding the good ones. It was possible for the top two teams to not even have played each other!

I don’t know how seriously the teams took these merit tables but its hard to imagine that the competition was as fierce as in a properly organised league where each team played each other home and away. In 1984 the merit tables became a bit more organised and in 1987 turned into the league structure which exists in rugby to this day.

This was 99 years after football had done the same thing. 99 years!

How could it have taken one popular sport 99 years longer to get to a competitive format than another?

The answer of course is that one was professional and the other was strictly amateur.

For the professionals it was all about getting the best teams to play each other.

For the RFU (who run rugby union) they believed that competitive leagues would result in more dirty play and would encourage to teams to try and pay players through vicarious means. The merit table wasn’t even anything to do with them either. I suspect they frowned upon it!

How awfully splendid. And amateurish of course.

Those who played during that era found it all incredibly annoying and as most humans do (especially sportsmen) longed for a proper competitive structure.

Once the leagues started properly, it wasn’t long until Rugby Union turned professional and the sport started the long progression into the highly professional fast-moving sport it is now.

That’s what competition does. That’s what league tables do.

Of course, my childhood obsession with keeping score steered me towards what someone once described me as suffering from “accountant’s angst”.

If that’s something that you can actually “suffer” from, then I plead guilty as charged. I have a strong belief in the mantle that if “you can measure it, you can manage it”. And my accountant’s angst has caused me to compare the challenge facing owner-managers attempting to save their business with the government’s attempts to eliminate Coronavirus.

High-performing businesses measure absolutely everything. Here’s how it works:

• Set some goals
• Identify performance levels needed to hit those goals
• Write a plan to hit those performance levels
• Follow the plan but measure the results.

If the results are not showing the improvements required – tweak the plan.

Of course, this is not popular with everyone. We have league tables for all sorts of things at A4G and generally speaking they create a sense of competition which drives everyone forward and has the net effect of improving the quality and efficiency of the things we do.

Our league tables cover lots of different things because as a business, we have to get a balance between a variety of issues. For our business, someone who is in mid-table on everything is better than someone who is top of one league table and bottom of another. That just highlights that they are ignoring problems. Problems that will probably come back to bit them and us.

I have had staff in the past who hated the league tables. And by some extraordinary co-incidence they were the same staff who were regularly bottom.

Back in the noughties, we had a really difficult individual who worked for us who seemed to make it his twin mission to upset as many colleagues as possible whilst simultaneously delivering a terrible service for the firm and clients. For the purposes of this article, I’m going to refer to him as Dipstick because it’s the politest term I can come up with and some of my longer-serving colleagues at A4G will know who I’m talking about. They called him much worse after he left, by the way.

Anyway, the big problem with Dipstick was that he was very adept at doing things which gave the appearance that he was doing a good job. This made conversations with him challenging. The data was highlighting problems but he always had an excuse. It was the fault of the juniors (even though the same juniors were working on other managers’ work without issues) or it was specific to his “type” of clients, whatever that meant.

This made pinning him down on the problems a bit like nailing an omelette to the wall; very messy and likely to end up with egg on your face.

Eventually of course, Dipstick ran out of excuses and promptly left. The problems we knew about turned out to be the tip of the iceberg.

They always are.

Over the past few years there have been a number of medical scandals where members of the public had been telling anyone and everyone about the issue for years. But until someone in authority listened and then went back and looked at the data and started doing some comparisons, nothing was done.

In the end, if you choose to look at it, the data doesn’t lie. People do. And your subconscious does. But the data doesn’t. Ultimately, that’s how they caught Harold Shipman. One whistle-blower, an analysis of the data, then a long investigation into the detail and the truth comes tumbling out.

In the current pandemic, there are no official league tables. But like the Sunday Telegraph did for Rugby Union all those years ago, the media does it’s best to create its own merit tables to compare one country’s performance against another.

Whichever way you look at it, the UK is doing pretty badly, which is why the people whose performance is measured by those “merit tables” have started to complain that they are not accurate. Human beings are the same whether they are engineers on the road, cabinet ministers or bumbling accountants.

In my previous article about Accountant’s angst, I argued about the importance of “going local” with the measurement. And that’s exactly what has happened. The lockdown of Leicester will be the first of many such lockdowns.

Hopefully this local measurement will prevent the mythical second wave.

The reason for the use of the word “mythical” is that the whole second wave theory is based on previous pandemics. But previous pandemics were a long time ago before we had the technology to measure these things. The second wave of the Spanish flu came about because everybody got complacent. And everybody got complacent because there was no data warning them that is was on the way back.

It’s why the vast majority of businesses that go bust do not have really good accounting systems producing accurate accounts for the owner-managers. Or they do but the person who produces them does not give them to the owner-manager. Or they do give them to the owner-manager but they aren’t read. Or understood.

You get the picture.

Actually, let me shine a light on that picture again.

It’s businesses that do not have really good accounting systems producing accurate accounts for the owner-managers who are much more likely to go bust.

But blissful ignorance helps you sleep better in your bed. Until the day when you realise how bad things are. Then you don’t sleep at all. Which gives you plenty of time to think about reasons why none of this is your fault.

But there aren’t really many excuses any more for not knowing exactly where you are in terms of performance. The Cloud accounting packages available to you represent incredible value for money and my team can provide you with one to one training so you can benefit from the accurate and relevant reports.

But if you’ve survived this long without measuring performance properly, why do you need to start now? The answer is an interesting phenomenon called “near miss theory”.

To understand “near miss theory” you need to imagine that whilst driving (perhaps over the speed limit) you came very close to a calamitous crash.

Logic would suggest that you would learn from that and would drive more carefully. But what has actually been identified is that after a short period of driving more carefully, we actually drive more recklessly because subconsciously our brain has concluded that “we got away with it” and will probably continue to get away with it.

It is thought that this is why Asian countries reacted so much better to Covid-19 than European countries. They’d actually had the “crash” (with SARs) so knew the impact. But Europe dodged not only SARs but other potential pandemics. Remember Swine flu? 11 years ago, the government was criticised for “wasting money” on vaccines and treatments for something that ultimately didn’t happen. Did fear of similar criticism cause the under-reaction in the UK from January to the middle of March?

In your business, it may be that you have got through 5, 10 or even 20 years of trade without any management information and without going bust. Ultimately, that has probably subconsciously re-enforced your belief that you don’t need to waste time and effort on such information.

But you do.

Because as furloughing ends and the economic reality of the next two years starts to hit, then as Warren Buffett says “you only find out who was swimming naked when the tide goes out”

So it’s your choice really. Strictly professional or erratically amateur.

If you’d prefer to be the former, we’d love to help. Over the past few months, my team has worked incredibly hard to pull all our advice, support and help into what we have called “The A4G Breakthrough Recovery Programme”. This is a support programme for any business looking to recover from the pandemic and grow their business in what we know are going to be very difficult times.

You can get more details but clicking on the website or giving us a call on 01474 853 856.

Have a good weekend.