Numbers Talk, Are you Listening?

February 25, 2001

It's amazing how often managers ignore the information that's at their fingertips. They often have reports created, spreadsheets filled out, and trends graphed-all done to show how they are running their departments. But when you ask what purpose the report or trend serves and how it may be used to manage, they often give you a blank stare.

Oh, they will provide an answer. However, when you really think about what they say and how they say it, you may not be all that confident in their answer. Can they tell you how they use the report? What actions can they say they'll take if the numbers go one-way or another? Can they explain how the numbers are generated? If they cannot, then they have little idea of how to use the numbers in order to make a difference in their organizations.

Here are several examples:
A collections manager regularly receives an aging report. It tells him how many accounts and their dollar values that have not been paid over given a timeframe. Each 90 days, an amount is written off the books as bad debt. The manager and those above him see the same report and when the value of the bad debt increases the collection manager should have an idea as to why. It's the one question that someone is sure to ask.

A billing manager tracks errors on customers' first invoices. The purpose here is to identify mistakes made in the customer account set-up and proactively correct them. Sadly, even though the error rate exceeds 40% over several months, it never dawns on the manager to follow-up on the quality controls for the account set-up group.

A fraud manager tracks alerts from his fraud system every month. In addition, he tracks the number of actual fraud situations found. This seems like an excellent method to measure the effectiveness of the fraud application. Since less than two percent of the alerts result in an actual fraud event, however, it doesn't dawn on the manager that the fraud system is not tuned correctly to identify fraud. His analysts continually work alerts that have little chance of being fraudulent and possibly misses real fraud.

A customer service manager manages his group thru the use of several statistics; avg. talk time, hold time and abandonment rate. These are standard measurements for a call center within a service organization. Unfortunately he doesn't understand the relationship between these measurements and the need to look at the reasons for these statistics. He pushes to keep talk time down so his hold time and abandonment rates are low. In doing so, his staff never gets to the root causes or customers' real concerns as their focus is to get the customer off the line as soon as possible.

A provision manager focuses on the number of orders processed. The more the better, as he believes it makes his department look efficient. He also tracks rejects, but blames the sales people for improper orders versus looking internally for poor quality standards or training issues. If asked about orders outstanding, he will have a number, but seldom will he know the aging of those orders.

In each of the above examples, reports are created, maintained and supposedly analyzed. The major issue here is that the results and what they mean are something overlooked by many managers. Within many departments, numbers are produced because someone said so or management expects it. If that is the case, then each of the above managers is doing their companies a disservice.

The purpose behind a report of numbers is to provide a direction. Good or bad, the numbers are what they are. How they are interpreted is the key. And every action has a corresponding reaction. A change in one direction may result in a poor result in another. But, the change may be in another department. This is an important key in understanding.

Managers must get out of their self-imposed stovepipe and determine not only how their actions can affect another area of the company, but how actions or numbers from another organization will affect them. Numbers talk, and they speak not only to the manager who owns the department and thus the number, but also to other departmental managers. When these other organizational managers do not listen to the numbers outside of their domain, they run the risk of failing to recognize why their numbers speak in the manner that they do.

Bottom Line
Numbers can tell a very compelling story. The skillful manager listens closely and learns to understand why numbers speak the way that they do and how to manage not only his organization but influence change in other organizations. In this fashion, the groups are linked in a cohesive learning process that assures not only individual successes, but also the ultimate success of the company.

Jim Marsh is a senior consultant for The Management Network Group, a telecom consulting organization.  Jim has worked in telecom for 15 years and is an expert in revenue assurance, risk management and fraud. Jim speaks and writes on improving operational systems and functions to improve bottom lines.