Retirement: Keeping Score
When it comes to your own retirement planning – the very words make you shudder, don’t they? It’s been a depressing pursuit for most of us for a long time, the recent stock market high not really making that much difference, yet. Most of my friends tell me that by traditional retirement calculators, they’ll be able to stop working when they are about 93 years old.
As a result, when that darn retirement statement comes in the mail, we glance at it briefly and then file it away. Maybe at the end of the year we look at the “score;” where we are relative to 12 months ago. And anyway, as an economist would tell you, that statement is a lagging indicator, not a leading indicator, of how you’re doing.
If you want to make real progress, you can’t just look at the score at the end of the year. You have to look at the data that tells you what to do now to improve your odds of retiring. You need to measure other things, like how much you’re automatically diverting from your hot little hands, the checking account, to your retirement account each month. Otherwise you’re just kidding yourself and spending your discretionary money on stupid stuff.
That may be a simple analogy, but I think it’s what has gotten a lot of well-meaning big companies in trouble. They are drowning in data and reporting after the fact, but they aren’t tracking the metrics that track the changes they’re trying to make in real time.
Alan Mulally insisted on a metrics approach at Ford Motor Company and took them from $17 Billion in debt to profitability in five short years. I just read with interest in the WSJ last week that Citigroup’s new CEO, Michael Corbat is planning to do something similar. “You are what you measure,” Corbat is quoted as saying to a gathering of 300 executives. He’s telling his leaders to create scorecards with clear measures in five weighted categories: capital, clients, costs, culture and controls. This is expected to set him apart from predecessor Vikram Pandit, forced out by the board in October after a series of mishaps.
If you can agree on which data actually measure the change you’re trying to drive, you’ll have a much better conversation going with the leadership team. For instance, you can’t do anything about it if you’re only measuring deals signed; why not measure the increase in the number of meetings with qualified prospects, or the higher percentage of meetings with people who can introduce you to them? Leading indicators make better conversations for leaders, because they can hold each other accountable and do something early, not late.
Corbat wants answers to a simple question – “You said you would do this. Did you?
Read the article here: Citi’s CEO Keeping Score
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