In a previous post, we have discussed resource planning along with a four-step tutorial using a project management tool. The next step is figuring out how to make the most out of your resources in order to maximize profits and reach your business objectives and KPIs. Business objectives and KPIs differ from your company’s vision, mission statement, and aims. Granted, there is always the financial aspect looming in the background, but the idea or vision behind your project is not the same as your KPIs.
Simply put, project managers use Key Performance Indicators (KPI for short) as a method to assess their project’s key objectives and targets. They help us understand whether or not the project is on track, if the deadlines are met, if the tasks are successfully completed, and so on. The report on your business objective should be transparent, unambiguous, and accessible, so that everyone understands their role in the success of the project. There are many factors that influence project success, but we will mostly focus on resource use.
First and foremost, define your business objectives or your project’s targets as well as short term and long term objectives. Did you barely start your business? So you want a steady cash flow to at least survive until you get more investors or a breakthrough on the market? Do you wish to maximize your profits or at least satisfy the needs of your shareholders? Some business owners are set on only improving profitability to maximize their wealth. Others insist on market shares, while others on ensuring a high rate of return of investment, thus receiving the necessary funds for investment and expansion. Do you want to reach a global market? Do you plan on investing into new technology rather than on marketing campaigns? Is brand loyalty a priority? Would you like to improve your brand image?
Are you focused on sales or on growth? Sadly, sales growth and profit are not always in direct ratio. These are some things to consider when planning your project and business. Needless to say, you will have to find the weakest links and possible leaks that hinder the success of your project. What’s great about company management nowadays is that there is a wealth of data, such as statistics, trends, demographics, and so on. The rich data help project managers analyze and evaluate their progress along with the effectiveness of their resources.
Let’s take human resources for example. You will have to come up with KPI questions that address your staff. Some businesses measure their sales and profits differently, such as daily, weekly, monthly, quarterly, or yearly. In addition, they evaluate the human component of their projects and ventures. Here are a few key performance indicators for people metrics, as outlined by ClearPoint Strategy.
“Employee Turnover Rate (ETR)”
What is your work environment like in terms of ergonomics, workplace culture, and synergy? Does your staff depart from your company on a regular basis? You might have a high employee turnover rate. Check by dividing the number of the personnel who quit by the average number of your staff. If so, you have to come up with solutions for the unwanted job mobility, such as financial incentives or perks, and so on.
“Employee Satisfaction and Training”
A survey or feedback form might help you assess your employee’s satisfaction level. Are the workers happy or enthusiastic about their work and contribution? Do they find themselves cynical, exhausted, disengaged, and frustrated? Is your staff well-prepared and regularly monitored in terms of knowledge and skills?
“Salary Competitiveness Ratio (SCR)”.
Divide the average salary you offer by the average that your competition offers. Will other companies tempt and scout your personnel? You cannot blame your staff for wanting something when you are not willing to at least offer them a competitive salary.
People metrics at play
Let’s come up with a scenario for these people metrics. Imagine that you are the owner of an automotive company that builds cars that run on carbon nanofiber, a material made from carbon dioxide. Since the atmospheric carbon dioxide is polluting our planet, thus choking us by the second, it would revolutionize ecology. The idea is splendid – it’s sustainable, futurist, clean – the public loves it and the shareholders are thrilled. Yet you check the numbers and they’re not great. So shareholders and investment companies are unsure whether to keep funding your project, though wild and innovative as it may be. One division is understaffed, thus working unsociable hours to the point of exhaustion. Another one has to wait for the previous one to be done. Another department lacks the expertise, a direction, or a clear strategy.
Firing underperforming staff can delay your progress, since you have to hire, train, and accommodate new workers. Instead, you might want to offer some training and coaching. If they lack a clear strategy or the much-needed organizational skills, we recommend some great apps and tools, such as Trello, Toggl Plan, Toggl, or Slack. Moreover, you need to determine how many workers are needed to finish building a car from scratch so that you hire enough people and assign specific roles. You should also ask for their feedback. Are they paid enough, granted enough days off, and so on? You do not want to lose your engineers to your next-door competitor.
We cannot state how important it is that your personnel or team members understand what you want to achieve. KIPs are not only for the owner and shareholders, but they are like a personal thermometer. KPIs help workers ask themselves whether their input is pushing the project forward or slowing it down. In this way, project managers can adjust their plans and targets so that they help improve the KPIs. This in turn yield positive results for the next quarterly or yearly assessment. It all boils down to the business objectives you have in mind, and how well you have formulated your KPIs. Employee Turnover Rate, employee satisfaction, training, and salary competitiveness ratio are four metrics intrinsic to not only to human resources, but to efficient KPIs.