We recently spoke with Brad Watt, CEO of Crossfield Products Corp., a manufacturer of construction coating, overlay and fluid-applied flooring materials. With 40 years of experience in the business, he had some fantastic knowledge to share with us on how to improve your bottom line by improving the communication within your organization.
If you’re a golfer, there is no doubt that you know your handicap, and you use this as a measure of your performance to beat. You can hit balls all day long, but if you don’t measure how well you do on the course, you’ll never know what to practice to get better. You need to know other things like fairways hit, greens hit in regulation, and number of putts to realize when you’re improving and why. Watt believes the same thing happens when you run a business. By measuring how your business is doing in terms of sales, spending, profit, and other key metrics, you can set that bar and you can take the steps you need to in order to get above it.
Using simple Excel spreadsheets, Watt’s team creates dashboards to be presented at monthly meetings. These dashboards measure everything from healthcare costs to days to ship to net sales, depending on the presenter’s position in the company. From here, they can easily spot trends from month to month, which will give them the specific information they need to figure out how well they are doing.
Watt says that this system keeps them “out of the dark”, where they can put a discipline into the system. If they find an area where they aren’t performing well, they can do an in-depth investigation into why and try to improve it. As he says, “If you don’t know how well you are doing, you can’t do better”.
He takes this process even further, measuring the differences between the two locations of the company. What he initially found was striking: one location had labor costs that were above 5%, while the other location was able to keep these costs down to approximately 3%. By measuring these costs, they were able to address the problem and bring their expenses down, definitely improving their bottom line.
As the President of the company, Watt likes to investigate everything he can. On a daily basis, he takes a look over his software program, considering what customers are buying and what they aren’t. If anything looks out of place, he challenges it. He says that knowing what your customers are doing is a critical factor towards the success of your company and the easiest way to know this is through measurement and good communication.
Watt’s philosophy that what you don’t know will hurt you swings both ways. His advice to newcomers in the business is that what others know can also hurt you too. He believes in good communication with clients and employees, but feels that some people take it just a step too far, and this is a lesson well-learned for him too. He suggests giving your clients and competition just enough information that they know what you are talking about, but without giving away relatively confidential company information.
The strength of a business lies in how effectively it communicates, with your largest asset (and expense) being your employees. Knowing how well they are performing and communicating what you need is going to be the key to any business’ success.
We appreciate Mr. Watt sharing his insights. We all gain from the knowledge transferred from senior executives with decades of experience.