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Strategy and Performance, 3 KPIs, SimpleStrata | read
Handing the flag - Purpose of Hire
Factors are fallings into place now. We defined our race path, staring with the customer relationship team. The next question lies in what each team provides to the next unit.
We call this the happy scenario. As expected, in daily business, new challenges are continually arising, that need to be addressed and dealt with. This is the ideal business dream scenario.
I proceeded to ask the company's team if they agreed with me that the output of any organization is the purpose of their hire? All members answered in the affirmative, revealing that this is what had been discussed in the interviews during hiring. It's called purposes of hire as the members have the highest control of this part, with occasional support, but generally, their power is usually over 8/10
Setting the Purpose of Hire KPI
Since the team already knew everything discussed above, they felt that there's no new information had been given to them. In response, I asked them, how do you measure the team? In numbers? Again, there was a loud silence that filled the room. The gave estimates of numbers, but they had no solid bases. To help them out, I asked about the total fixed cost, including permanent employees. (I will not use accurate numbers for confidentiality and to only calculations)
Fees: 120 million
Estimated yearly profit: 10 million
Although it was clear that the team's purpose of hire was to bring bids to the company, it wasn't clear to them how to set the measure, so I used reversed engineering to do the math.
If your company execute projects that are worth a minimum of 130 million excluding external costs, what should be the value of the bids that the relationship team should be bringing?
Assumptions:
Winning rate = 50%
The average percentage of achievement of your team = 50%
The relationship team should bring bids with a minimum value of:
(130 million) / (50%) / (50%) = 520 million
Bingo, we have the target of the first measure.
Customer Relationship KPI 1
Bids value equal to 520 million
We moved to the other team, which is the estimation team, once again reviewing their purpose of hire and how to accurately measure their KPI. This is a reactive job, and it should be estimated on OLA.
Estimation Team KPI 1
Count of the submitted proposal on time overall requested proposals
To ensure the job is being done correctly, we added another measure here to provide the team is doing the right estimation.
Estimation Team KPI 2
Count of the submitted proposal we're not the highest overall submitted proposal
We kept moving to decide the measure for every team output. Purpose of hire KPIs
Setting up the Financial Control KPI
Now, a bigger question gets raised, what if our fixed cost gets higher, what if the relationship team request to hire an army to bring for us the 520 million? This marks the point where most companies get trapped. They get caught up in fixing and monitoring the top line, overlooking the costs. Even if they do monitor the costs, they may not know which job is costing them more money. This is where the design for financial control KPI comes in, which so essential for any company success:
If a company gets the 130 million gross profit, it will take 10 million as profit, and the rest of the money would need to be distributed to the various teams. Let's take a look at the percentages, but first, let's remove the support services and back-office as one cost
The relationship team shouldn't cost me more than 6.5 million, which is 5% of the total sales that we get. If for any reason, their percentage is higher, then they might be taking from the company’s profitability. This goes for all the teams. If their cost percentage is higher, it dips into the company’s profitability, causing them to go into loss.
These percentages can be decided based on historical analysis or based on efforts estimation. They should be visited regularly and monitored thoroughly.
We call this measure the “Financial Control,” and it's one of the most important steps as it distributes the financial responsibility across the team and allows them to become financially aware. It will help discover the leak in the cost if any, and it will grant flexibility for the team to grow. Now if the relationship team needs to hire more employees, they can, as far as the below measure is under control
Customer Relationship KPI 2
Percentage of team cost / total revenue is less than 5%
Some companies might link the percentage to the value of purpose of hire (520M) which means the measure now is Percentage of team cost / total bids value is less than 1.25%
I lean towards the second approach, only if another step is added. This measure would be a team goal. This would work to avoid having the individual spirit reduce the quality within the upcoming stages, but how do we define the team goal?
Setting up the Team Goal KPI
There are two ways to define the team goal. One can check what the organization is trying to achieve and connect everyone with it; or, the other one is to link the first team with the purpose of hire of the second or third team. To avoid having the relationship team bringing none qualified bids, we add a measure called team goal.
Customer Relationship KPI 3
Bids to order conversation rate higher than 25%
We know that the influence of the relationship team is minimal in closing the deal, but regardless, the power remains. They are the ones who brought the bid; they know the customer, and they can still help. In such cases, we introduce the weight, which is directly related to the team control over the measure. Setting weights will be discussed in later blogs
Summary of Relationship Team 3 KPIs with weight
On a larger scale, for example, in organizations, the flag is passed from one team member to another until it reaches its final destination, the customer. Behind the scenes, the office extends support to help optimize the function of the leading runners to overcome challenges and so they don’t lose sight of what’s essential the race. Keep your focus to define the most critical 3 KPIs for the runners:
Purpose of hire
KPI 1: Value of bids should be higher than 520 million
Weight: 10
Financial Control
KPI 2: Percentage of team cost/bids value less than 1.25%
Weight: 10
Team Goal
KPI 3: Bids to order conversation rate higher than 25%
Weight: 3
It didn't take me more two hours to set the practice. When I left, two hours later, I left the company's team with the tools to create their measures. Less than a month then, I met with them again and was delighted to see that they are experts in employee performance. They created clarity, aligned the team, and most importantly, they distributed the financial load amongst all the employees. Everyone is a partner, not just an employee. The partners no longer have rising tensions and a lack of communication amongst themselves. Together, they work towards a common objective and have a high level of ownership that will lead them to success.
In my next blog, I will guide you on how to hire partners and not just employees. As well as how to have your employees survive the rise in the gig economy.
Visit www.exceeders.com/store/simplestrata for more information.
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Originally published Dec 26, 2018 12:58:42 PM, updated July 24, 2019
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You see the end product but we’re bringing you closer to the people behind it!
We sat down with Hanadi Sidawi, product manager of one of our most popular solutions “SimpleStrata” to get to know her more and understand her journey to becoming SimpleStrata’s product manager.
Hanadi graduated from Abu Dhabi University with a degree in computer science and a minor in business administration. Her professional career was kicked off when she became a trainer for basic computer courses. She then shifted into another company, where she worked as a legal assistant for 1 year and then got promoted to senior legal assistant, maintaining that position for 2 more years.
With that kind of experience under her belt, she was able to join Exceed as an HR Coordinator where her focus was on internal policies and labor law compliance in Exceed’s different branches. After some time, the bulk of work was getting more focused on employee performance. To familiarise herself with its methodologies and the system handling it, she began the process of self-teaching and read books to study the main frameworks that formulate the basis of Employee Performance Management and Strategy Execution.
That way, she become proficient in the language that provisions the performance solution that Exceed was developing and was working as a performance specialist implementing the methodology of employee performance in Exceed. As she worked more closely with SimpleStrata, she became proficient in it, which lead the way for her to become the product manager.
By getting more exposed to customers, Hanadi and the team came to know that the challenges that Exceed faced internally were common across almost all organisations from different industries.
Exceed had the methodologies but faced a challenge in communicating, implementing, and executing them the right way, as did the other organisations.
These challenges included:
After the system had reached the desired level of maturity, it was launched in Exceed first then to the market and was able to resolve the 99% of the challenges of many organisations, regardless of their size/industry.
Want to know more about the methodologies behind SimpleStrata?
Click here.
Success Stories
One of our larger customers, SCAMAF (Social Care & Minor Affairs Foundation) were using excel sheets to manually monitor and execute their strategy, which was not only very time-consuming, but it was also exhausting the efforts of employees involved who can be utilising their time in other more efficient tasks. Not only that, but the end result would usually have inaccuracies as human error is guaranteed with repetitive tasks such as this one.
What the SimpleStrata team did was they helped them migrate all their data, which was a huge number of excel files, into the system. They set up the system according to SCAMAF’s execution process, and they provided them with the required training to be able to understand and use the system.
They immediately were satisfied with the system as it had created the perfect environment for them that does not require human intervention. After using the system, they had clear visibility on individual performance as well as organisational performance. Whereas they previously had a full department dedicated to strategy execution, they now had only the Head of Strategy monitoring everything via SimpleStrata.
Statement from the SimpleStrata team:
Since we launched it to the market in 2019, we reduced the time and efforts of 20+ organisations with 3,000 employees across numerous industries: 50% decrease in the time required for collecting performance data & 40% increase in employees’ awareness on their goals and KPIs.
Intrigued? Click here for a FREE trial!
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KPI reporting can clearly communicate the progress of a company towards its performance goals. Not only the managers can access key results in an instant and transparent manner, but also make informed strategic decisions.
Here are the top benefits of investing in a great KPI reporting tool for your organisation and management.
1. They Let You Measure Results
Measuring is an important part of KPI reporting. It is the primary key that informs you about the success or failure of your work. You need to measure the progress made towards the achievement of your target: the number of sales increased (sales performing), the number of new customers or anything in your business you want to measure.
KPIs provide actionable information because they are always measurable and quantifiable. For example, if one of a hotel company's identified CSFs maintains a high level of occupancy throughout the year, a KPI would be the percentage of occupancy of rooms, measured on a weekly basis, using the previous year as a benchmark.
2. They Help You Set Business Goals
You need to set a target and aim to reach it in a set period. You can set more than one targets and create different keys for each of your targets to ensure you measure your progress and then try to achieve your goals.
It's often difficult to keep all departments or teams within an organisation aligned and working toward common goals. Once an organisation's Mission, Vision and CSFs have been written into a strategic plan, KPIs break down complex information into understandable metrics and provide feedback on the organisation's progress. Communication of progress toward KPIs keeps everyone moving forward in the same direction.
You May Also Like: Guide to the Must-Have KPIs for Service Companies
3. They Offer Incentives to Your Team
KPIs are often linked to incentives. Teams or individuals are offered an incentive to improve their KPIs to a particular level during a specific time period. In order for this to be successful, the KPIs have to be clearly understood and quantifiable, and reporting must be accurate. The information provided by KPIs empowers people to improve their own personal performance along with that of the organisation.
4. They Help Your Find Issues in Your Business Strategy
Managers can use KPI to identify any issues present in the construction of business. Any type of problems such as labor productivity issues, danger to employee safety and failures to meet the expectations and needs of customers. KPI enables businesses to recognise these issues to take appropriate action to rectify these problems. Companies can also resolve customer’s issues and concerns with the help of KPI by analysing feedbacks from clients to check whether the expectations of clients are met or not. This approach also helps in eradicating future potential issues that may occur in the future projects.
4. They Let Your Discover Strengths in Your Strategy
With the KPIs, companies can easily unearth potential strengths to use any opportunities that you can use to enhance the performance of your business. Businesses can easily find the strengths whenever a post-project review shows a high score and this score indicates your performance in your performance. Companies can follow the same procedure to upgrade the performance of their company if your post-project review shows high score.
5. They Align Your Marketing & Sales Efforts
With help of KPIs, companies can easily measure and calculate all efforts that also includes marketing spend and sales department so that all departments can work in a harmonised way. When goals are decided by companies, team members start work in collaboration. This approach brings two departments closer for better insight.
6. They Save Business Expenses
With KPIs, you can easily recognise any cost saving prospects related to the project construction and also craft ways to curb any extra costs that may occur in future. KPI basically include tracking of uncommitted costs and also upsurges committed costs as and when required. Business can easily add factors like contingent costs and price escalation into the committed costs to restrict financial exposure. The knowledge that is gained from the audit can assist companies to manage all labor and material costs when they do bidding for construction in the future.
Are you considering getting your own KPI dashboard?
Try SimpleStrata
SimpleStrata provides a complete solution which enables organisations to communicate and execute their strategy in an effective way, by helping them:
Manage Results
Set goals, objectives, and KPIs
Generate periodic measures
Distribute to employees
Schedule review meetings
Generate results’ scores
Manage efforts
Plan initiatives, projects, jobs
Link to strategy plans
Schedule and assign activities
Monitor progress
Generate efforts’ scores
Create visibility
Define correlations between results and efforts
Generate business intelligence dashboards
Provide insights about corrective actions
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The growth and ultimate success of any company is determined by the consistency of results. These results can only be achieved if the team consistently meets the desired goals and targets. KPIs are the means of setting and measuring the success of these goals. In this post we will briefly take a look at what exactly KPIs are and why an organisation needs them.
KPIs (Key Performance Indicators) are measurable values that show the effectiveness of a company’s business objectives. A company will set High-Level KPIs that measure the overall performance of the business towards achieving its strategy. Low-Level KPIs measure the performance of departments, units and individuals.
Although the terms “KPI” and “goal” are often used interchangeably, they are not really the same. A company’s goals define the outcomes that it desires to achieve, in a form of measurable results. KPIs, on the other hand, are indicators on the performance that tell whether the company is on track to achieve those goals.
Without knowing what the goals of the organisation are, there is no way to gauge a team or individual performance. Therefore, no ability to guide the team to improve or optimise. With clearly defined KPIs it is easier to give accountability to the specific team members and achieve transparency. Teams can collaborate better when they know exactly where to focus their energy.
Numbers do not lie! It is easy to answer the status update related questions when KPIS are clear as day. Performance analysis and making personal decisions is all easier. Work is not measured by irrelevant benchmarks such as hours at work or number of emails sent per day. KPIs let team members take responsibility of their time on the job and making sure that they align efforts with goals.
This is logical. When you implement KPIs, you will automatically need to develop systems/processes to measure them. With this information, the business intelligence gained will allow management to make more informed decisions.
Though they may be easily confused, KPI’s are not exactly an organisation's goals themselves, but they’re a measurement of them.
A KPI can indicate that your sales team is only generating 30% of the targeted number of leads that you have set as a goal. As a manager in this situation, you are instantly aware of your sales team’s progress and the reason for not hitting the desired numbers of leads.
When you’re able to measure your goals this way, it gives you the opportunity to see where the gaps in your efforts might be and subsequently make decisions that help you reach your goals faster.
If you measure the same KPIs quarter over quarter, you can begin to detect patterns in your numbers. These patterns can help you optimise your business strategies.
This can allow you to make predictions about the slow or high performing quarters. Or identify over or under performing team members and help them improve their efforts.
One of the main reasons to invest in a KPI software is integration. The data flow from different sources can be a big complication if no integration methods are applied.
Using a KPI software allows all your departments to enter their data manually into one big system, or the program can connect to different data flows automatically. Whichever method is used, you can be sure that the integrated connection will boost your business management.
Now that you know why KPIs are significant for your business, here is a handy guide to help you in defining KPIs for your organisation.
Download this FREE guide and start setting the KPIs that are relevant to your business.
This ebook will provide you with sample KPIs for the most common positions at service companies, with guidelines for setting smart KPIs.
You see the end product but we’re bringing you closer to the people behind it!
KPI reporting can clearly communicate the progress of a company towards its performance goals. Not only the managers can access key results in an instant and transparent manner, but also make informed strategic decisions.
Strategy teams and performance specialists are usually responsible for communicating performance measures to employees and making sure they are reporting their actual achievements on time, in order to generate accurate performance reports.
