Step 11: Huddle Magic

For command of the financials, consider these four questions in your monthly performance management huddle, as recommend by Chuck Kremer, CPA, lead author of Managing by the Numbers:

Which is the weakest bottom line? There are two bottoms lines beyond net profit. Operating cash flow is first because it is the most objective of the three. Return on assets is another crucial big-picture measure because it connects the income statement with the balance sheet. This first question suggests you pick one key bottom line on which to focus your meeting.
What crucial drivers are responsible? There are 12 key drivers that are the mathematical basis for the results as measured by the three bottom lines. In the case of a weak bottom line, only one or two of the 12 key drivers will usually be crucial in any particular business model and situation.
What's the business story? After identifying the crucial drivers of this month’s weak bottom line, you can now look at exactly what that means in your specific situation, with a high level of focus. This makes a very simple picture from which to get alignment and move to concerted action.
What to do about it? By eliminating all but a few variables from the discussion, your team can now focus its energy effectively on the specific KPIs that are creating the crucial driver results. KPIs are defined as any critical number that gives a metric for focusing on workflow, and how that flow of work relates to both the customer and overall financial results.

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