The Value of Metrics in Achieving Your Business Goals
How do you measure success?
Often, we resort to how we feel about the job we have completed or other subjective goals. If our feelings are positive, then we claim success. The issue is feelings can be fleeting or misleading and goals can be vague and unmeasurable.
One reason many people struggle to mark success is they do not have numbers or metrics attached to their goals. This is not for lack of effort, but often, employees do not know where to start or what questions to ask. There are pieces of your job that will not be numerically gauged, however, if you think creatively, you can almost always find numbers that can tell the story of your success.
Prior to identifying goals, we first must understand how goals should be written in order to objectively measure success. A common goal-setting concept is called SMART.
S – Specific
M – Measurable
A – Attainable
R – Relevant
T – Time-Sensitive
When we identify a goal that we want to hold for the next quarter we ask ourselves a few questions to ensure our goal is SMART.
Specific: Is this goal specific or vague? Will I be able to know if I completed this goal by the end of the period or will it be left up to “point-of-view?”
Measurable: Can you mark success based on a black-and-white determination? If possible, is there a number associated with your goal?
Attainable: Do you have the resources and time to achieve this goal by the end of the period? Will you be able to fulfill your other duties AND achieve success with this goal?
Relevant: Does this goal warrant the time and resources required for achievement? Will this goal help the company be more successful?
Time-Sensitive: Have you identified a time constraint or is this goal potentially never-ending?
It is important to set goals, but make sure that at the end of the period you are able to objectively claim success. Rather than state a goal of “complete more prospect meetings,” include metrics. For instance, you could say, “by the end of June, I will have completed 18 prospect meetings face-to-face, averaging 6 per month and 1-2 per week.” As long as you have the resources to achieve this goal and the goal will help the company be successful, then this goal is SMART.
What, How, Who?
Now that we understand SMART goals, we turn our attention to 3 important questions everyone should ask when identifying business metrics that will help you achieve your SMART goals:
First, what business metrics should you track?
Second, how often should you track your business metrics?
Third, who is accountable for your business metrics?
What business metrics should I track?
The first and most important piece of managing business metrics is determining the what. It might take some time and tinkering to determine the best set of business metrics. Think about your last review with your supervisor. How did they measure your success? Perhaps you should ask your peers or colleagues how they claim success at work. Are you able to back your quarterly SMART goals into metrics that you track monthly, weekly, or even daily?
Some people identify too many numbers to track and when you are tracking so many different numbers, you lose sight of what is most important. A good rule of thumb is thinking through what 5 numbers you could determine success of your job, department, or company if you happened to take an extended leave of absence.
If you are in the Admin Department perhaps you track average days for accounts receivable, G&A expenses last month, or employee satisfaction through a tool like OfficeVibe. Think how you could back into monthly or weekly goals based on quarterly goals. As we were in our hiring phase last quarter, we knew that for every person we hired we would have to perform 5 HR Interviews. We set a goal of completing 15 HR Interviews by the end of the quarter which was 5 per month and 1-2 per week. We wanted to hire 3 people and by quarter end, we had succeeded.
If you are on the Sales Team, you could track won revenue for the previous quarter or product gross margin percentage last month. You could even get more granular and set a goal to make 50 sales calls per week or schedule 15 business reviews with clients every month.
If Operations, maybe you track client satisfaction from customer surveys, monthly recurring revenue, or reaching a specific response time for client requests.
For me, there are 5 numbers that help me understand the state of our company:
- Customer Satisfaction (through a feedback tool called SmileBack)
- Earnings % of Revenue
- Technical Services Gross Margin %
- “Prospective” Monthly Recurring Revenue Dollars
- Monthly Administrative Dollars
You may go through different seasons requiring different metrics. If you are trying to achieve certain SMART goals, it is important to set your metrics based on those goals and create incremental goals to achieve your quarterly and annual goals.
From your numbers you should be able to fill in the gaps so you know exactly where you can improve and where you can celebrate success.
How often should I track my business metrics?
The second piece of tracking metrics is determining your timeline. Different metrics require different timelines. However, if you have a goal that is longer than a week, identify the incremental weekly metrics that will help you achieve your monthly, quarterly, or annual goals.
For instance, if your SMART goal is to land $10,000 of new business revenue within the next quarter, you know that you need to land approximately $3,333 per month, and $770 per week (assuming 13 weeks). Rather than arriving at the end of the quarter only to be surprised that you did not achieve your goal, measuring your goal every week allows you time to finetune your process mid-period.
At KiteTech, we track success through daily dashboards and weekly and monthly scorecards. At our annual planning meeting we identify our SMART goals for the following year. We revisit these goals at quarterly meetings, but our weekly scorecards help us determine whether we are on track to reach our annual goals.
Who is accountable for my business metrics?
The final piece for measuring business metrics is crucial. Patrick Lencioni’s fourth dysfunction in his book, The Five Dysfunctions of a Team, is “avoidance of accountability.” Without accountability, a company has little chance of survival. It is crucial that every business metric has ONE accountable owner.
Business metrics can be team goals, but when the dust settles, the success or failure must be delegated to one team member. As the Controller, I am accountable for multiple metrics, one of which is the Monthly Administrative Expenses. I am ruthless when someone wants to add dollars to my account because I know that I am accountable for every dollar spent. Accountability creates a sense of ownership of your department or task. In a sense, I feel as if I own the Monthly Administrative Expenses.
If you find that you have more than a handful of numbers that you are accountable towards, start to delegate numbers to your team. Earlier I mentioned having 5 numbers. “5” is not a magical number, but it emphasizes that we must limit the quantity of numbers that we track so that we do not become overwhelmed and fail to succeed. If you feel that you have too many strings to pull, you probably need to delegate or be more attentive to the significance of certain numbers over others.
The last piece of accountability is a weekly and monthly check-in process with your team. In your team meetings, everyone should explain whether they are On-Track or Off-Track. We use a tool called BrightGauge that allows us to quickly identify On-Track or Off-Track goals and metrics and enter any notes. We are able to review all weekly team goals in under 10 minutes and often any Off-Track goals lead to To-Dos or Issues that are brought up later in the meeting.
Management consultant, Peter Drucker, once said, “what gets measured gets done.” The antithesis of this is also true, “what is not measured does not get done.” When you are asked about your success are you able to give an objective response? Failure is not for lack of determination or effort but is often the result of poor metrics and incremental management. The next time your team sets goals, think about how those goals can be made SMART. Back those goals into monthly, weekly, and daily metrics and now when you get to the end of the quarter and someone asks if you were successful, you can know whole-heartedly that yes, you found success.