HOW HIGH IS YOUR RETURN ON MANAGEMENT

The classic business ratios for measuring performance-return on equity , return on assets, and return on sales, to name a few-may be useful. But none is designed specifically to reflect how well a company implem ents its strategy. Enter return on management (ROM), a new ratio that gauges the payback from a company's scarcest resource: managers' time and energy. Unlike other business ratios, ROM is a rough estimate, not -an exact percentage. Still, it is expressed like other business ratio s by an equation in which the output is maximized by a high numerator and a low denominator: Productive organizational energy released / Man agement time and attention invested Knowing which organizational facto rs conspire against or work to maximize an organization's productive e nergy will help managers calculate a rough measure for this equation. The authors suggest that companies look at five factors - referred to as the ''five acid tests'' - to approximate this measure: Do employees know which opportunities do not directly contribute to the company's strategic mission? Do managers know what it would take for the company to fail? Can managers recall their key diagnostic measures with relat ive ease? Is the organization free from drowning in a sea of paperwork and processes? Do all employees watch the same performance measures t hat their bosses watch? If a manager can answer yes to these questions , ROM is probably high. If the answer is no to some, ROM may be low, s ignaling that managers may need to step up their communication with em ployees about what they should and should not be focusing their effort s on.