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Happy or not? A tale of non-financial KPIs

Not all key performance indicators (KPIs) are effective. Some are barely understood by the people instrumental to the outcome being measured. To help employees understand the meaning of KPIs, Dorvin Lively, CFO at Planet Fitness, developed a Financials 101 class.

“I make everybody in the company go through it,” said Lively, a panelist at the recent MIT Sloan CFO Summit in a session focusing on identifying, interpreting and acting on KPIs.

In addition to financial measures, the club also uses a number of non-financial KPIs, said Lively — the wear and tear on machines being one. At fitness clubs, the treadmill closest to the locker room, for example, typically gets used most, so machines are rotated based on usage minutes.

Outside competition has an impact on business results, so Lively measures the lead time on new clubs coming into a market by researching pending and signed leases.

Customer satisfaction, of course, is another critical non-financial KPI, Lively said. The clubs recently added a gadget that asks patrons whether they are happy or not. “It’s wireless so it can be put anywhere in the club — at the front desk, in the restroom,” Lively said.

The rating, transmitted in real time, is taken seriously. “We incent our club managers on only three things: Say hello, say goodbye, and keep it clean,” Lively said. At one of the clubs that was consistently scoring on the low end of happy, the company tutored front desk managers on their obligatory hellos and goodbyes.

“We came up with a script,” Lively said. Instead of just hello, clients were greeted by name when they checked in. The front desk manager was instructed to tell the client to “have a good workout” on the way in and to “have a good day” on the way out.

Pretty basic stuff, but according to Lively,  the customer happiness score at this club quickly went from the 70th percentile to the 90th percentile. “So, there is a metric that is not financial but is using today’s technology to see how a club is performing pre and post changes,” he said.

For more on the MIT panel on KPIs, check out my article, “Finding KPIs that matter to the business.”

Email Linda Tucci, executive editor, or find her on Twitter at @ltucci.

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Cisco also made a number of acquisitions in the past 18 months. It is certainly possible that as they digest those acquisitions, they adjust the operating plans some and move heads around (or out).

But the SDN and cloud trends absolutely do require a redoubling of effort. Chambers was candid not long ago when he said they waited too long on SDN. It makes sense, given all the industry demand, that they would want to accelerate those plans, which could require a rebalancing of resources.

All in all, this feels like a pretty expected move. And we shouldn't forget that Cisco does fairly routinely shuffle their bottom players out.

-Mike Bushong (@mbushong)