Measure profits first, walk later

How the struggling can thrive and the successful can boost profits even further.

Measure profits first, walk later
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We’ve all heard the saying ‘A farmer’s footsteps are his best fertiliser’. It has a ring of homespun wisdom that instantly appeals and seems to make so much sense, doesn’t it? That’s a pity, because it’s nonsense! Don’t get me wrong. There’s a place for those footsteps, but success in business (and life) is about balance. Too much of anything always has a negative effect, and it’s the same with management.

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A good farm manager will do a fair amount of walking – MBWA (‘management by walking about’) in business school jargon. But unless that walking is backed up by lots of time in the office, it’s pretty useless. Far better advice would be ‘Measure, measure and measure again – and then walk’.

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What you cannot, or do not measure, you cannot manage, and today we have the tools to measure just about everything.  Take the weather. The humble rain gauge and thermometer have given way to sophisticated weather monitoring stations. If you’re planning on spraying, they tell you what wind to expect at hourly intervals. While you are spraying, an SMS alarm will warn you of impending changes in wind speed and direction.

What’s more, you can instantly access this data by radio, mobile phone or satellite, wherever you may be. Of course, all this must be backed up by some MBWA, carrying a spade, but it’s measure first, and walk second.

The invaluable plate meter
A recent article in The Dairy Mail tells of the huge production and cost reduction benefits gained by an already highly successful dairy farmer, through accurate and repeated measurement of his pastures. The plate meter used to do this has been around since the late 1970s. I wonder why it has taken so long to hit the shores of Southern Africa.

This measurement tool has also found a place in veld management. Prof Winston Trollope has perfected its use in making the all-important ‘to burn or not-to-burn’ decision. The days of taking a casual look out of the bakkie window and using a bit of gut feel to tell yourself, “Ja, I think we need to burn this camp”, are over.

This also needs a bit of systematic walking about carrying the plate meter and a notebook, but once again, it’s measure first, walk later.

Power/load factors
Electricity costs have gone through the roof and are a cause of great concern. Do you know the ‘power factor’ (PF) of each of the electric motor installations in your business? Do you measure your monthly electricity ‘load factor’ (LF)?  These determine the efficiency with which you are using electricity. PFs measure how well an electric motor turns electricity into work. A motor and switchgear are inanimate pieces of equipment that lose efficiency over time, like an internal combustion engine. And an inefficient motor is easily fixed.

LF is a measure of how well you’re managing your use of peak demand. It’s the simplest of calculations and by driving the LF up, your electricity cost will come down. Many farmers I talk to don’t even know what these measurements are or mean, yet they pay thousands of rands monthly for electricity. But I am most puzzled by the reluctance of managers to ignore  the tool that could do more to help them build success in their businesses than any other – psychometric testing.

A wide range
After all, it’s the employees who have far and away the greatest impact on the business, so why would a tool that exists to help a manager select, train and develop their team be ignored? In fact, there are a wide range of tests available enabling you to ascertain the skills, knowledge, abilities, attitudes and personality traits of individuals at all levels. They don’t reduce the need for intuitive judgement by the manager in dealing with staff, but they are a tremendous aid in so many ways.

These include: The selection process of new employees – be it to check literacy or to assess the candidate’s level of intelligence and integrity. The identification of training and development needs. The assessment of suitability for promotion or transfer. Helping individuals to understand their own strengths and weaknesses and providing information for succession planning and coaching.

Expert advice and guidance is required in choosing the appropriate tests, and the more sophisticated may come at some cost, but the insights they provide make them well worthwhile. These are just some of the tools available. Anything can be measured!

This article was originally published in the 4 July 2014 issue of Farmers Weekly.