How can I use Scorecards to Measure Workplace KPIs and Performance?

Transcript

Lachy Gray  11:32

Yes, so many different ways. We can do it. So annual company strategy has four pillars, similar to the four you just mentioned. So we use customers, the workplace, people in financial, and that approach is heavily influenced by the balanced scorecard framework. And then with each within each of those four pillars, we see three things that end state goal so sort of aspiration, strategic goals to achieve those aspirations, and in the strategic projects are more tactical ways to achieve the goals and aspirations. So for example, in our people pillar, which is our people and their capabilities, one of our end state goals is to maintain a highly skilled and capable workforce. Then one of our strategic goals to help achieve that goal is to proactively guide the team skills and capabilities development, and then we have a number of strategic projects to achieve that strategic goal, such as plan out between 22 skills and capabilities training grow leaders through training and coaching regularly upscaling the water team using IANA itself. So we review our progress against these quarterly, and then separate to that we have a dashboard, which 12 metrics across these four pillars that give us insight into how we're tracking. So there are things like marketing leads, sales deals, one customer churn, recurring revenue, gross margin, and ours used for our EAP Employee Assistance Program. And for a metric to be on that dashboard has to be something that we care about. So by that, I mean, if it's on track, we're cheering. And if it's not, we're jumping on it to understand why, and talking through things that we can try to shift that number. Then we update these metrics monthly. And so we introduced the dashboard this year, because he wants to show progress throughout the year. And to give better visibility to the wider team of how we were tracking in the past. With our team metrics, we found individual teams, we're looking at them but no one else was. So it's the first year that we're trying this particular approach.

Karen K  13:46

Yeah, I really liked that you have that dashboard and that cadence of checking monthly, because it's really important, and I know that some people might think that sounds like a lot of work and really overwhelming but I'm assuming you have goals that are quite easy to track and some technology to support you. They're lucky.

Lachy Gray  14:04

Yeah, exactly. And that was one of the filters for choosing the metric. I think we discussed in the last episode. It's easy to come up with a metric. And then when you think about how are we actually going to measure this and who's going to do it. And that fills that out a fair few. So it took us a couple of months to get these 12 because we started with metrics that sounded really good, and either was too hard to track. Or when we did track it didn't really mean much to us. We weren't going to change how we were doing things off the back of it.

Karen K  14:38

Yeah, and I think that's really good advice and with our clients we recommend keeping it as simple as possible. You know, and a couple of key points is firstly, you know, determine what will shift the dial. So like you said, it isn't something you're gonna be jumping up and down about or something can be concerned about. Because you don't want to have a KPI at a company level. For example, you know how many customers customer testimonials per quarter. If the KPI of customer retention will actually be the one that helps you with the decision making. So rather than having both of those, you would just have the one because that is what's going to help your marketing manager for example. Don't go with KPIs if you can't get that data easily or if it's not quantifiable. And I just say if you can't get a number, then it's just not worth putting on there. And if you think that it still is worth putting on there, find a way to get the numbers so for example, you know, you need a financial target. And if you don't have the systems to get that then you need to get those systems. So it's not just a matter of saying no, I can't get a number. I'm going to forget about that KPI do interrogate that first. And then the other thing is share freely. So you know as business owners, we always want our employees to be as invested as we are in the business and they just won't be but you know, we can help people to understand that bigger picture and come along the journey and you know, I have seen companies where their frustrations because for example the sales and marketing teams don't seem to be aligned. And yet the business owners haven't shared the revenue position of the organization. So, you know, from an owners perspective, they're thinking, Oh, my goodness, you know, we are just not where we should be. We really need to get that marketing done. We really need our salespeople out there. But the actual employees that need to do that work don't understand that burning platform.

Lachy Gray  16:37

Yeah, that's how I experienced as well. I mean, we used to have revenue as a critical number and which meant a lot to Mark and I have been the business owners and then they had to acknowledge that it doesn't mean as much to most of the team day to day How is what they're doing day to day driving towards that. So instead, we try to break it down into more meaningful metrics, such as new customer revenue recurring customer revenue, customer churn customer upsell, because then, based on those, you can say, Okay, well to help drive, new customer revenue, same sales. I'm going to aim for 15 customer touch points a week. And that's more of a leading metric that tells you how things are going right now. Rather than telling you how went in the past, which is what revenue as a metric is really to tell you, Hey, this is what we achieved in the past. It can take a long time to really move the dial on revenue, so something that we're doing now might take three months for that to be realized in revenue. So trying to get a balance of those kind of lagging indicators and metrics which tell us something about the past. And the leading ones. We say, hey, if this changes, we're not hitting it right now. Then we've got a pretty good idea that it's going to change something very soon for us. And especially, as well, I think, if you have a big revenue number like we did for the sales team, like they really feel responsible for that. And it can feel overwhelming to have such a big number. So it's another reason why we moved away from that. I mean, of course we still have a revenue target, but we break it down. It's okay well sales are responsible for new customer revenue, and that's a smaller proportion of that overall revenue target and then the customer team who are responsible for the customer experience and retaining customers. They'll look at recurring customer revenue and customer churn. They're things that they can control.

Karen K  18:45

Yeah, and I think that's a great point. Because, you know, salespeople can be very easily deemed as the problem. You know, it's very easy to point fingers at sales. But we know that the whole organization feeds into the ability to get those sales and to get that revenues. So I think chunking it down is really good. And I love what you said about you know, for example, the 15 touch points with a customer per week, because that is something that I can attach myself to and I can measure myself to and I can say okay, I know that if I do that, then that's going to help achieve this target. You know, versus if you have a business of let's say $5 million in revenue, the number becomes too big to be meaningful. And it's just, you know, I don't understand and well how do I actually contribute to that? And I know there's a psychological construct that explains this, but I can't for laughing remember what it's called. I have to find that for the show notes, but it's essentially the idea that when something is too big and too abstract, we just can't mentally connect with it. And I did a bit of research into this topic, and I have to say that in all of my research and binging or Googling, I found a lot of pretty generic information about the types of metrics or KPIs businesses should use, and a lot of it was aimed at very large and enterprise businesses. So I thought it might be worthwhile sharing some of the KPIs that we find that our clients start with, as generally they're more important to smaller businesses. And there is the ability usually to get and track that data. So for example, in the financial, you know, obviously there's revenue but as you were saying, Lachy, you know, how do you break that down and chunk it? So you could have an overall target, you could have a mix of revenue, which could be by product or it could be by type of customers and looking at your costs, looking at profit looking at return on equity. So you know, generally they're that they're the easy ones, aren't they lucky to get those numbers, you know, accountants usually pretty helpful with that. But then going into customers, and you know, I've heard this term lapse, which is leads appointment presentation, sales, you know, whatever acronym or or measurement you want to use, but most organizations will have the CRM or Salesforce that they can get that kind of information. So like you were saying, there's 15 touch points per week. You know, how many appointments are we getting? So just making sure that that they're being looked at, you know, customer satisfaction scores, looking at customer retention testimonials, how many new customers how many repeat customers and then getting into operation so you know, on time delivery quality, labor utilization and productivity which goes into billable hours, especially in service based businesses, you know, product development, and then with people you know, employee turnover numbers, employee engagement scores, looking at your leadership capability, you know, if you have a cultural metric, if you're a business that needs to really track work, health and safety and incidents, for example, you know, they all go into there, so, so they're just some ideas and for those that are listening, be great if you could get in touch with any metrics or KPIs that you use in your business, because we can add them to the list and share them in a future episode.

Lachy Gray  22:08

Yeah, for sure. And I think there are so many out there, it can feel overwhelming. And you might feel as though we need to track against all of them. Otherwise, we're going to miss something. I think one way to think about it is that what's the story that we're trying to tell? And then how are we going to tell it and what metrics will help us to do that? And that's one filter to use. When we're deciding we could start with a smaller number. I like to start small. And then, so we might only have five, and we only have one per team and then say for example, I mean, does that give us enough if not add an additional one on or as I think the go to kami to start with 15 Say and for a small business too many. And what I find is a real balance made for me, the KPIs is designed to motivate it can very easily become a demotivator. Whether that's through quantity of KPIs, we're trying to measure the fact that they're they're just not well suited. So they're not they don't accurately capture the work that we're actually doing and the progress that we're making. So we feel like well, what's the point? And especially when things are tied to the to hitting those KPIs. Sorry

Karen K  23:44

you run a role to really finish let me know when you're ready for me to press resume

Lachy Gray  23:58

where should i Where should I go from?

Karen K  24:03

How about I wrote down designed to motivate so how about using that as a platform and we'll try and work out as we go try and

Lachy Gray  24:12

go back to that you'll raise my head. Yes. Okay. Let me just close the door. It's gonna be alright,

Karen K  24:30

oh, you know what I've got my order thing here.

Lachy Gray  24:36

And especially when things are tied during those KPIs, such as a bonus or team reward. It can be really demotivated if we don't hit them. And I think it can also encourage poor behavior. And I think we've seen that in the past with some some larger organizations where the KPIs were things like signing up people to an account, and it really incentivize some some pretty poor behavior. So they are quite powerful from a motivation, perspective and risk, be careful and mindful of that, I think when we're when we're selling this.

Karen K  25:17

Yeah, and I think that's a really important point that you've just brought up because if you're not then looking at the measurement of your goals on a regular basis, like you are on a monthly basis you might actually miss that you are encouraging that poor behavior or that you're inadvertently encouraging behavior that you didn't consider when you set that goal and that's something that I have seen and in terms of you know, bonuses. Yeah, you know, I I'm yet to say a really good, like incentive structure. Because generally, you know, we're human beings and so what we end up doing is setting ourselves goals and KPIs that we know are achievable. And as much as we talk about stretch goals. You know, when it's tied to a financial incentive, then people are more likely to, to make it easier to achieve. So, you know, that's, that's another minefield in itself. But I think it's, it's really worth considering all of those things. When you're thinking about KPIs, you know, how does this not just help the business, but how does it help to motivate our team members and give them clarity on what they're doing as well?

Lachy Gray  26:31

Yeah, for sure. I think and I think a big part of this is setting them collaboratively and, you know, not setting them on behalf of someone else. If we don't have input into a metric that we're being held to. That sets us off on the wrong foot straightaway. So I think that collaboration is really important and to balance the business what the business is trying to achieve. With what the individual is trying to achieve and their team and how they're going to be supported through that. Because if it's something that I care about, that they can see how achieving it will move the needle for their team and for the business, then everyone's going to win. So I think it's certainly worth trying to get there.

Karen K  27:19

Yeah, absolutely. So to recap on today, I think a couple of things that stuck out to me is you know, if you're looking at either resetting the metrics for your business or seeing them for the first time, is to think about that story. So you know, what is it that we're trying to achieve? How do we actually tell that story? And keeping the measurements simple and measurable and sharing them with your teams? Anything else you'd like to add to that Lachy?

Lachy Gray  27:48

And it's asking you I do I care about this metric and and if not, then have the conversation and produce something that you do care about?

Karen K  27:59

Yeah, great advice. Links to anything we've discussed today will be over on our website, just follow the links to the podcast section. That's it. yano.com.au or amplify. hr.com.au And if you receive value from this episode, we'd love it if you could leave a rating or review over Apple podcast, so someone else can find these episodes to help with their business.

Lachy Gray  28:22

And coming up in the next episode, we discussed workplace design with a special guests. Now we're talking about what does the office of the future look like, after a couple of years working remote and now hybrid being the predominant sort of working environment?

Karen K  28:39

Yes, we're getting out our crystal balls. So that episodes coming up in two weeks from now, click the subscribe button. And you'll be notified when it's available. Any final thoughts Lachy.

Lachy Gray  28:51

Just create metrics that matter. Thanks so much for joining us.