Setting KPIs: Do your team know what is expected of them?

Setting KPIs: Do your team know what is expected of them?

Setting KPIs is a great way to unlock your team’s potential, boost productivity and meet your business goals.

Finding ways to unlock your team’s potential and boost productivity is vital to the success of your business.

So, how do you do that? How do you ensure everyone is pulling in the same direction, putting in maximum effort, and giving you the results you want?

A common way to do this is through key performance indicators, or KPIs.

Whether you’re used to managing people or you’re still acquiring the skills, KPIs provide you with a simple and effective way to monitor how your team is doing.

What is a KPI?

A KPI is not a job description. Rather, it’s a measurable outcome, allowing you to rate the success of your team’s activity against a target. So, for example, if a technician’s primary role is to sell labour, and labour is measurable by hours, then the KPI could be “to sell 6.5 hours of labour every day”.

The great thing about setting KPIs is everyone knows what is expected of them. Not only does your team have targets to aim for, but you can easily identify if there are problems that might need your attention.

How to set KPIs in your workshop

So, how do you create KPIs for your team?

Here are some points to take into account when forecasting output targets:

How many labour hours on average have your technicians been producing each week?

If it’s currently 20 hours a week, there is no point aiming for 40 hours next week. The targets need to be realistic, so maybe up to 30 hours would be a more achievable goal. As targets are reached, you can slowly increase them.

What are your technicians’ qualification levels?

Individual production expectations should vary depending on the qualification level. A first-year apprentice should not be expected to produce the same level of output as a qualified technician.

What other roles do your technicians perform?

If you have a qualified technician who manages two first-year apprentices and spends most mornings answering the phones, you should not expect the same level of output as a technician who is 100 per cent devoted to fixing cars.

How should KPIs operate in practice?

To find out how KPIs can work in practice in a workshop environment, we spoke to Jesse Doherty, who owns and operates two workshops, called Euro Technik, in Perth.

He said his staff have team-based, rather than individual KPIs they aim to achieve each day, as this encourages collaboration rather than competition between technicians.

“The KPIs are written down and communicated on a weekly basis but then reinforced in a larger manner at quarterly performance reviews,” Jesse said.

Issues with under-performing individuals are addressed directly with the individual.

What kind of metrics should KPIs measure?

Jesse said KPIs can measure productivity and efficiency and can be calculated simply based on billable hours, or “how many hours you paid them versus how many hours you charged for them”.

He said while technicians work for eight hours a day, it was reasonable to have a target of 6.5 billable hours a day on any day they’re working. This doesn’t count leave days, training days, etc.

Jesse said some KPIs also tie back to the results of the customer satisfaction surveys he sends out each week.

How do you track KPIs?

Visibility is key. Jesse said both his workshops report daily on a whiteboard, reporting revenue for the day and billable hours. There is also a column tracking the monthly targets, giving everyone a snapshot of how the team is stacking up.

“If we’ve had a great day or someone’s done something brilliant, the KPIs reinforce that,” Jesse said. “On the flip side, it might show we’ve had a couple of bad days and why. It may just have been bad luck on jobs. It may have been just not getting a couple of jobs out, or it may have been parts’ issues, or whatever it may be. Then we can ask if anyone have any great ideas they can bring to the table to help out. So we can try to include the team, rather than dictate to them.”

A quick staff meeting every morning gives everyone on the team an overall idea of what the day looks like and who is doing what tasks.

“It gives an opportunity for staff to highlight any potential roadblocks they may have in maybe meeting their KPIs or that may affect the team KPIs,” Jesse said.

What if someone isn’t meeting their KPIs?

The advantage of recording KPIs in this way is you can identify when things are falling behind.

Jesse said when you notice under-performance, the KPIs give you an opportunity to open up that conversation.

“It's just a matter of saying ‘Hey, how do you think your performance has been over the last couple of weeks?’ ” he said. “If they’re aware of it, then obviously it leads you into a conversation. If they’re unaware of it, then at least you can bring the facts to them. You can say, ‘Well, this is what your last week looks like. Do you think something might be up, or is there anything we need to do to help you?’

“Obviously, in my eyes, the first question that should be asked is are you providing them with enough support? Are you providing them with the resources they need and the information they need? Is everything okay at home? Is there any health concerns? If all of that genuinely seems to be all on track, then, ‘What's wrong? Because your head’s not in the right space.’ ”

How do I go about introducing KPIs for the first time?

Change can often meet resistance in any workplace, and KPIs could potentially be viewed as a negative by staff. Jesse said it is vital to get staff buy-in before bringing in a KPI system.

“First, communicate to the team why you want to do it,” he said. “Do you want to do it because you want to fill your back pockets? Or do you want to do that so you can send your staff for better training and so you can buy some new equipment and see if you can give your staff pay rises?

“It’s about working smart, not working hard.”

Whether it be overall revenue, labour sales as a dollar value, labour sales as an hours value, or all of those, sharing the data with staff is vital to get their buy-in.

“Then they can actually see an improvement over three, six or 12 months,” Jesse said. “When they see the results of it, they feel proud and they want to do more of it.”

Where to from here?

If you don’t already use KPIs in your workshop, start thinking about your expectations from your staff. Then, book in a catch up with your team members to discuss the idea. If you’re all onboard and pulling in the same direction, you’re far more likely to achieve your goals.

This article was published 20/07/2020 and the content is current as at the date of publication.