You may have seen several metrics-related blog posts from Gray Stone Advisors, but this one reveals strategies on how to build a business case in order to get a Business Aviation Performance Metrics program approved by your Aviation Reporting Executive.
Why implement performance metrics? The old adage ‘if you can’t keep score, you can’t play the game’ confirms that performance metrics are just as essential as an income and expense statement which ties back to a departmental budget. These tools are fundamental to leading and managing any function, let alone one with a multi-million dollar annual operating budget.
Business aviation performance metrics come in an array of flavors. Some focus on historical activity (hours flown, passengers carried, cities visited), others focus on specific events, while others may focus on forecasted future outcomes (such as projected temporary labor use versus plan).
Four Business Reasons for Implementing Performance Metrics
While the benefits are many, here are four top business reasons for implementing business aviation performance metrics:
1. Metrics help teams know what’s going on in the business. At Gray Stone, you’ll here us say quite often, “What gets measured ends up also getting improved – 100% of the time.” So whether you’re measuring the cost of fuel, deadheads, travel, pilot-induced maintenance or spare parts – gaining this insight in a centralized location will help your leadership and business aviation team identify what’s really happening.
2. Metrics help drive business performance. Establishing agreed upon objectives and measuring performance and results has a powerful effect upon behavior and focus. Most rational people want to be seen in a positive light so they will modify their behaviors to produce the desired results, provided that the goals are well understood and seen as achievable.
3. Metrics help identify savings and efficiencies. Why go through the hard work of measuring and analyzing data if the program doesn’t pay for itself? At Gray Stone, we recommend measuring your biggest controllable costs first to identify savings. By way of example, a super-midsize business jet that flies 500 hours per year consumes about 175,000 gallons of fuel per year. At US$6 per gallon, that’s more than $1 million. Therefore, if you can identify ways to reduce your spend by 10%, your department will save $100,000 a year. And, folks, that’s real money!
4. Metrics help achieve desired outcomes. Business aviation organizations that operate most closely to that of a standalone business enterprise, and that are fully accountable for their operating results, use metrics in a strategic manner to help them focus upon and achieve their desired outcomes.
Getting the Necessary Help
Even if you may not have the exact skills in the organization to put together a metrics package, you can still get the budget you need by demonstrating to the host organization’s Aviation Reporting Executive that the operating and financial improvements are coming from illumination, transparency and visibility. Business aviation organizations are rarely staffed with the professional expertise to design, create and install these sophisticated reporting packages. They are, however, equipped to produce the reports on a periodic basis. The most logical next step in developing a plan to capture key metrics is to hire external experts that are trained in how to perform the requisite development work and education, freeing up the business aviation organization to perform their core responsibilities at a significantly elevated level of efficiency.
Best Practices in Designing Performance Metrics
The first and most foremost best practice when starting to incorporate metrics is to design the entire system in context; not piecemeal. Development and implementation should be well thought out and completely in an orderly process. The end result of the design phase should be thoroughly reviewed, both within the business aviation organization and by the host organization – particularly the Aviation Reporting Executive.
As development and implementation continue to proceed, there should be milestone reviews along the development path to ensure the project continues on schedule and will meet the dynamic requirements of all key stakeholders.
Once a flight department is trained on tracking basic metrics, the numbers should be quite revealing.
Let’s quickly reiterate Gray Stone Advisors’ Level IV Metrics Program:
Level I: ‘Give me a number, any number.’ Imagine that thick manila folder of various reports and numbers from a variety of sources. The hope is that the sheer volume will impress someone at corporate headquarters and that no one calls with a question.
Level II: Activity-based metrics. These are all the common data elements reported by operations during the just-concluded reporting period. They may include hours and miles flown, passengers accommodated (how many and by name), fuel consumed and the dollar amount expended, and approved versus actual headcount. Interpretation of the data, at this level, is generally left up to the reader to decipher.
Level III: Predictive Metrics. These measurements use current and past history as well as budgets for future activity and expenditures to forecast, based on various techniques, the future values of pivotal operating numbers and leading indicators. This provides aviation leadership the opportunity to modify current operating parameters to achieve desired future outcomes in a proactive manner.
Level IV: Value Creation Metrics. These measures quantify the value created for the enterprise by leveraging the business aviation assets in pursuit of the enterprise’s overall objectives. These measures are both tangible and intangible, with most focusing on the incremental results that were achieved by leveraging the aviation department’s key distinctive competencies of agility, flexibility, speed of transit and speed of response in opportunistic situations.
A well-developed business aviation performance metrics reporting package will help your flight department’s leadership team focus upon what matters most and illuminate requisite changes in operating tactics needed to achieve desired future outcomes.
OK! Now it’s time to get to work! Do you have enough information to build a business case to your Aviation Reporting Executive? If not, give us a call and we can review our case study on how a leading flight department successfully implemented our metrics program—and became a company-wide role model as a result. You can prove, quantitatively, that business aviation is a value creator for your company.