Which KPIs should be tracked — and why?
As a trade business owner, the level of KPI tracking you decide to engage in is a personal decision. To start, choose widely applicable KPIs that matter to your business and then use them to further define the goals and objectives you believe will lead to success. Keep in mind though that setting both realistic and achievable targets is essential, and the exact method for accomplishing them will likely also be guided in some part by your team culture.
To give you a better idea of what we mean, here are four examples of KPIs we track using our Staff Performance Dashboard that also include all the points we’ve just mentioned:
1. Revenue per employee (we call it: Total invoiced out)
This is a measure of what each employee brings in, calculated as a flat figure. It establishes whether a team member is meeting their basic obligation to positively contribute to the profitability of our business.
2. Profit per employee (we call it: Gross profit)
This employee performance KPI further breaks down profitability (free from expenses). It measures how much money each worker is bringing in each day/week/month over and above our set break-even point.
3. Employee billable percentage
This KPI shows us the overall ratio of directly profitable work to the internal cost each employee engages in. It takes note of both “billable” and “non-billable” time, to ensure that a healthy balance is maintained.
4. Overtime per employee
Overtime is a fact of life in trade businesses and as such, an overtime related KPI can be tracked in several ways. We keep ours simple by just monitoring how many extra hours a week our tradies are working and using that data to ensure we aren’t straying from the norm.
It should be noted that businesses that adopt a KPI tracking and reporting method similar to ours will find it to be a largely employer run system. However, it’s always important to include your employees in the process wherever possible. This is because your team members will perform better when they’re actively engaged in your business. Tradespeople know when their boss genuinely cares about them and will always contribute more positively when you make sure their achievements are recognised and celebrated.