Step 7: Cause and effect -- How to begin linking daily activities to financial results

Step 7 centers on the action-to-results flow chart, which lays out the progression by which the “three-bottom-line” results are created via people’s actions. Key performance indicators and financial sub-drivers impact one or more of the 12 drivers that make up the mathematical basis for the results created by the three bottom lines — operating cash flow, net profit and return on assets.

Each of the three bottom lines is influenced in the right direction by an increase in sales or a decrease in assets and expenses. Chuck Kremer, who created three-bottom-line performance through Managing by the Numbers and the Financial Scoreboard, noticed that all business results need be tuned to the challenge of raising sales while lowering expenses and assets relative to that growth in sales. This is the fundamental challenge of growing a business — continuously improving by doing more work with less relative effort and resources.

This content has not yet been Rated.

To Rate content, please Login.