KPIs: Why Measurements Matter

As you can probably see from the setting around me, I'm in a car right now and it's probably an appropriate place to start talking about this subject. So imagine driving a car with the windshield blacked out or imagine also driving the car with the rear view mirrors all blacked out and the back windshield blacked out. That is the equivalent of not having KPIs in your company, for your department, for your team, for yourself. And what you find is that organizations, I mean that is really the effect that occurs is is you are flying blind.

You are driving a car without knowledge of where you're going. You are flying a plane without an instrument panel if you cannot measure performance from a team all the way down to an individual level. And what happens with that is if we can measure it, we can improve it. And in the modern era, we have to be able to measure and improve consistently.

And especially now, there is more attention than ever for better or for worse on productivity of every role in an organization. And as individuals, we need to be able to embrace this. So I'm going to tell you how to find your KPIs in a minute, but I want you to also just consider this, that having KPIs for oneself is better than leaving your job up to the arbitrary. Having a measurement of your role is better than leaving up to the arbitrary.

So I was Golf Channel's first director of search engine optimization. And I remember very early on in my role, maybe even the first couple of days, I heard people saying, hey, so-and-so was let go on the on-air marketing team because someone didn't like a logo they made, or someone didn't like a design they had made that we very arbitrary reasons why people were let go. And I'd come from an environment where we always had measurements, we always had KPIs that allowed us to know where we were and prove our results. And I was not going to leave my job up to the arbitrary.

So what was interesting, I went to my supervisor at the time and I said, hey, what are the KPIs for this role? And his response was, I don't know. I don't know what they are. So what did I do next?

I made my own. Now, I didn't say I made up my own, I made my own. And I said, here are the measurements and here are the things I want to be measured by, I had both what we call leading and lagging indicators, we'll talk about those in a minute, but that allowed my performance to always be based on numbers and metrics. And what that proved was the value that I produced and the value that my team produced and how we got better consistently at those things.

And nowadays, you know, it's funny how many people will still say, I don't know, I don't have any KPIs, or I even see leaders in organizations go, I don't know, no one's given me my KPIs. That's your responsibility is to, if no one gives you KPIs, especially if you're on a leadership team, better make your own, okay? I've had sales leaders in the past say, oh, you know what? The CEO hasn't fully agreed on the budget of the revenue forecast.

You create the revenue forecast, present it, have the CEO approve it. That's how we work as A-players. So let's talk about, now, what was interesting about that, by the way, is at Golf Channel, there were a lot, just like any organization, Golf Channel, not perfect, but still a fun place to work. There were some arbitrary things that happened over time.

And myself, my team, my department, we had consistent consistent measurements of our output. And that allowed us, that actually gave us, even in the face of some adversity sometimes, the ability for people to get behind us, trust us, and keep our jobs even in trying and adverse circumstances. So I would say from a self-preservation perspective, understand that there is a tremendous value from having KPIs that measure your results and output. Now let's talk about how to make your KPIs for yourself or your team.

And if you're a department leader, I would start to think about it this way first. First, what are we measuring? Are we measuring a quality output? You know, is my department responsible for quality?

Are they responsible for speed or efficiency? Or are they responsible for something related to cost? I would say, what's the most critical output that I have on my team? And one of the things you can do, it doesn't matter if you're in a service industry or inside of a manufacturing industry, picture your department.

And you can even do this for your own job, by the way. Picture your job this way, too. Like, if it's just your role or your job, picture it the same way. Picture it like a conveyor belt.

Think about the old Acme Bugs Bunny cartoons where they have a conveyor belt, stuff comes off the conveyor belt. What falls off your conveyor belt at the end of the day or week that can be counted, whether it's related to price, quality, cost, that's where to start. That output is called your lagging indicator and it should be measurable down to a day or a week. Why?

Because we don't, we only can get, we typically only are able to form habits and systems around things that can get measured daily or weekly. If it gets to monthly, bi-monthly, it's just too long. It tends to be too long to make measurable So really try to get that output KPI down to a daily or weekly output. And then you back up and say, okay, what's another number earlier on in the process that I own that can tell me if I'm going to hit that lagging indicator consistently?

So let's take an example of a sales team, easy example. Sales, their output is closed clients or revenue. So it's both in a lot of cases, right? Most cases, closed clients, revenue, new clients, revenue.

And in order, that's their lagging indicator. Now they gotta back up and find the leading indicator. Usually their leading indicator will be something like number of client calls or client visits or, you know, prospective client calls, prospective client visits, or number of contracts out. Those are leading indicators that more consistently get you to, that can consistently get you to a lagging indicator.

And, you know, the further that you establish consistent probability, let's say that you get really good, let's say your lagging indicator is number of new clients and your leading indicator is the number of contracts out. Once you get to like 60, 70, 70% consistency that you know that, hey, if we get X amount of contracts out, we're gonna close this amount of clients, start backing up further and say, what's the next predictive number? Maybe it is visits, maybe it is calls to prospective clients. Start trying to back up further and further to those leading indicators.

But if you're just starting out the process, really try to identify what's one lead or what's one lag and what's one lead. Start with the lag first, back up into the lead. And again, this isn't just at a department level. You can do this at an individual level as well.

But that's how you truly find KPI. Now, the easy way around this too, and someone's going to not watch the video and they're going to throw this in the comments, but the really easy way to do it also, you can type in the role that you play and go to chat GPT or the AI of your choice, type in, Hey, here's the role that I have. What are leading and lagging KPIs that I could use to measure my role consistently? That might even be faster.

So quite honestly, either I gave you kind of the long method, I gave you the short method, but in the modern era, there's really no excuse for not being able to have those metric measurements throughout our organization. And as leaders, we want to be we want to be able to focus on measurable outputs where we know people are getting better, not leaving their job or our job to the arbitrary and being able to get consistent improvement over time. So hopefully that's helpful. That's a quick and easy way to set up KPIs, a couple of quick and easy ways.

And like I said, remember kind of that example, and I've seen this before. If you don't have KPIs, you don't have measurements, your job is left up to the arbitrary. Commit to them.