Business is quirky. Do you remember you first few months at a new job – pretty much any new job? Co-workers and administrators would start throwing around acronyms or funny sounding words – internal code…but what did it mean? Did you have to be initiated into the club to figure out what all these acronyms meant? Every industry and perhaps every employer is different.
I have a hypothesis about how this became commonplace. Just my theory – it would be an interesting discussion. Thinking back to my days in elementary school, trying to remember the Great Lakes, we learned the acronym HOMES. The lakes – Heron, Ontario, Michigan, Erie, and Superior, not in order, but at least I can still name them. Although this is technically a mnemonic since it spells a real word. The lakes in order is less impressive SMHEO – Superior, Michigan, Huron, Erie, and Ontario. From a young age we were taught to memorize, memorize, memorize.
Healthcare professionals were taught mnemonics and acronyms in school for the order of bones, muscles, and ways to make what they write even shorter – Rx – prescription. I had to look up why we as a modern society still use Rx as an abbreviation for prescription. It is derived from the Latin work “recipe” meaning take. Today we use acronyms, mnemonics, and symbols because they are deeply rooted in history or maybe because it truly shorter – NASDAQ is an acronym for… National Association of Securities Dealers Automated Quotations.
We use so many acronyms, abbreviations, mnemonics, and symbols it’s as if we are speaking another language. Which is some situations it is perfect. In this global economy having a shared understanding of responsibilities is critical. While preparing documentation for my new business FinanSynergy LLC it was pointed out that small business owners may not know what KPIs are – and I shouldn’t include them in a description without a definition. So what are KPIs since I brought it up? KPIs are the Key Performance Indicators of any business. Each industry has different standards and different targets. These are essentially well defined goals that are measured on a regular schedule.
Common KPIs across all industries may include operating margin, the number of days of cash on hand, the average days it takes to collect money owed to you (accounts receivable- A/R), and a debt to equity ratio. There are indicators related to productivity that include employee hours or FTEs used (full time equivalent employee) worked compared to production or number of services provided.
Does your organization currently track various indicators on a regular basis? If not…start from the beginning of your company, what was the original outcome you wanted to provide with this product or service. Statistics is where you start – how many did you sell? How many services did you provide? How much did it cost you to sell those products or services this month compared to how much you made (operating margin). How many hours did you pay employees this month? How many hours on average does it take to make or perform the service? You are able to determine productivity standards using that technique.
If you are staring at all these acronyms and have no idea what they are it is extremely important to ask. They very well might be the pulse of your organization. Learning how to read and understand these terms are critical to the communication in your work environment. As a manager – share these statistics with your employees. You may be surprised some may be fascinated with them – others may feel like you are big brother watching over them – but it does convey an environment of cooperation.