Effective Management: 20 Keys to a Winning Culture

Chapter 14   Efficiency and Your Vital Signs

When you go to the doctor, your vital signs are checked: heart rate, blood pressure, body mass index, or blood sugar level. Basically, all the vital signs of human health. Businesses also have “vital signs” that can tell managers a great deal about the health of their organization and indicate the need for corrective action. Most are simply labeled “ratios,” or more correctly, “conversion ratios.”

There is no particular magic in any one ratio, although some are more powerful measures than others of course. Most business leaders become acutely aware of their profitability ratios, such as returns-on-assets ...