We were watching a hockey game the other night, and I was amazed at the information the sports analysts were giving us. They were able to tell us how many goals and assists each player had, the goalies’save percentages, where various players had been picked in the draft, and how hard their shots were.

Sports is serious business; and to be successful, everything gets analyzed to measure the effectiveness of the players and the systems. The same is true in business, where well-crafted key performance indicators (KPIs) provide a road map to success.

A KPI provides measurements and metrics that support and facilitate achieving critical business goals. It allows owners and managers to create and manage the company, while attracting top players.

Why should I use a KPI?

Using KPIs allows you to evaluate the process you have taken to reach specific targets. Determining the right KPI will depend on your industry and which part of the business you are looking to track. A good KPI will provide better accountability within your business, while allowing all team members to understand their day-to-day roles.

Many business owners find that their "A" players thrive with clear rules on accountability, while the "C" and "D" players do not. But at the end of the day, all of the players want to know what the score is and if "we" are winning.

A KPI can be a short-term corrective action to resolve an issue, such as too many unbillable hours during the work week. Or it becomes your ongoing system of measurement for areas like operations, financial, staff, customers, safety, sales and fleet (see above). Not every KPI you create needs to be retained throughout the life cycle of your business; the great thing is that a KPI can be customized for your unique situation.

Measuring a KPI

It’s best to start slow and get into a routine of measuring a few goals. You can expand into other areas of the business once you feel comfortable with the process and schedule of measuring your KPI. When you first implement your KPI, keep it to yourself. Don’t inform your staff you are measuring or creating the KPI until you have at least three months of data collection.

Ideally, KPIs should be measured as often as possible, or as often as makes sense. Financial KPIs that are reliant on monthly reports cannot likely be measured less than monthly. But if something can be measured weekly, then don’t put it off until the end of the month.

As much as I am a strong proponent of KPIs, it is possible to fall into the trap of measuring too many things. That’s why it is important to evaluate what needs to be measured and then to slowly implement those KPIs. Everyone in your business should have at least one KPI, but not more than 3. This will help them know how well they’re doing in their role, and collectively, how well the company is doing as a whole.

It takes work to create and manage KPIs; but it is worth it in the long run, both for your bottom line and for your staff. After all, everyone loves to be part of a winning team.

Sample KPIs for snow businesses

• Operations
  • Gross margins on completed jobs (end of the season)
    
  • Budget vs. actual hours (end of the season)
    
  • Salt usage (after every event)
    
  • Site damages (after every event)
• Financial
  • Cash flow (weekly)
  • Accounts receivable (weekly)
    
  • Accounts payable (weekly)
• Staff
  • Attendance-absenteeism (after every event)
  • Employee satisfaction surveys (midseason and end of the season)
• Customers
  • Customer calls during or after each event (after every event)
    
  • Retention rates (end of the season)
    
  • Customer satisfaction surveys (midseason and end of the season)
• Safety
  • Number of incidents reported to management (weekly)
    
  • Lost time (weekly)
• Sales
  • $ or work quoted/estimated (weekly)
    
  • $ of work sold (weekly)
• Fleet
  • Equipment damage by employees (after every event)
    
  • Equipment breakdowns (after every event)

Grant Harrison is president of Nextra Consulting, based in Ingersoll, Ontario. Contact him at (519) 868-6398 or www.nextraconsulting.ca.