Using metrics to move your SME forwards

Guest blog by MarketInvoice

As your company grows and becomes more established in its field, focus turns to productivity and asking: “How can we get better at what we do?” A structured and data driven approach to change can enable you to keep up with the fast pace of competition and improve your productivity.

Find the time

In order to set yourself up to properly record metrics you’ll need to take some time to prepare. But with this style of productivity management laying the foundations well will save a lot of time further down the line. The key is to make gathering the data you need for your metrics as automated as possible.

There are a lot of tools out there for different types of teams which allow you to gather data without it being too labour intensive: an application lifecycle management (ALM) tool like Visual Studio Online can be very useful; RescueTime is another good example.

Implementing change

Enabling the change takes a bit of thought. First, take a look at and analyse your metrics. Armed with that knowledge, embark on an iterative cycle of continuous improvement where you address the weaknesses you identified using your metrics. The process contains five steps:

1) Decide on what/how to measure
2) Measure the baseline
3) Set improvement targets
4) Implement change
5) Evaluate

What are KPIs?

KPIs, or Key Performance Indicators, are the measurement tool that are a subset of metrics used in the iterative cycle. These are quantifiable measurements that reflect the critical success factors of an organisation or team. They should be time based, meaning the metric should report the success of the previous week, month or sprint. For example, a KPI for a sales team may be total sales for a month or number of new clients per month.

Choosing the right KPIs

Before you begin to record your metrics you must decide on what to measure. This is arguably the most important part of the process and should be approached with care. It can be possible to do more harm than good here: when people are motivated by a proxy of a target, the real goal can be forgotten. This is best explained with an example.

Imagine you run a call centre and want to improve productivity. You decide to use the number of calls answered in a week as metric to measure this. What you may find is that some employees might “accidentally” hang up on customers in order to keep their calls answered at a maximum.

This problem of “gaming” the system is not limited to rogue team members, it is also likely that decisions may change based on sub-consciously keeping the metrics in mind.

By choosing metrics from three different categories – utilisation, performance and quality – it becomes impossible to game the system.

Luckily there is a solution. By choosing metrics from three different categories – utilisation, performance and quality – it becomes impossible to game the system. So in the example of the call centre, you would also measure average customer rating of the service and time spent on phone.

It’s all about that baseline

Recording the baseline metrics is critical in order to evaluate the success of a change in process or product. The longer you can measure the baseline for the better, as this will help you to draw conclusions on changes with more certainty. The baseline measurement may also uncover subtle trends that were previously undetected that could identify areas of unknown success or early warning indicators of problems yet to surface.

Interestingly, the very act of measuring the baseline may result in improved performance due to the Hawthorne Effect (when people behave or perform better because they know they are being watched). So be careful this does not skew your baseline measurements too heavily.

What to do with the data

Transparency is key here, make the recorded KPI results available to everyone in your team or preferably your organisation. This act of regularly publishing forces the whole team/organisation to acknowledge the successes or failures you are experiencing. The results should be presented graphically to show changes over time which will show trends at a glance.

Finally make sure you evaluate your success based on the targets you set before you implemented the changes. This means that you must acknowledge and face up to failures or, hopefully, can be used to quantify your successes!

Pete Lord is a developer in the MarketInvoice tech team and pioneered the KashFlow integration with MarketInvoice. MarketInvoice is an online invoice trading platform that allows businesses to unlock cashflow tied up in long-dated invoices.