What’s your number?

Our industry’s businesses are being stretched thin, and it’s creating a new “corona-stress” on customers, team members, cash flow, and profitability. Many businesses find themselves with revenues falling while simultaneously dealing with reduced staffing and new work environments.

In order to lead effectively, we need to look at things that we haven’t looked at before. For example, many feel forced to rush and figure out how to connect with remote team members to maintain communication and ensure productivity. While we may have recognized the importance of moving in this direction in the future, it wasn’t at the top of our priorities in the here and now. Let’s be honest, our industry is not as proactive as others when it comes to being innovative outside of urgent necessity.

Fast forward to the urgent necessity of the current situation, and we find most companies have a percentage of their team working at home, bringing added anxiety to management. The inability to physically see team members working raises many questions for leadership because there aren’t productivity measures in place outside of what the manager sees happening.

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If this is real life at your company, you’ve probably never thought of your administration tracking this whole new level of productivity and performance, but guess what? You probably already are. Most ERP (Enterprise Resource Planning) software includes the input data to track and calculate productivity for your entire inside team.

Think about it. There are only a few key activities that each team member group does daily.

Inside sales/Sales Coordinators:

  • Phone calls handled
  • Dollars entered
  • Lines created
  • Transactions completed

Accounts Receivable:

  • Accounts created
  • Transactions completed
  • Contacts made

Estimators:

  • Square foot completed
  • Dollars estimated
  • Projects completed

Metrics can be determined for each group of team members. Here’s an easy step-by-step process:

  1. Find the data inputs in your ERP and extract them for a given time period (month, year, etc.).
  2. Break down and total by Team Member. That’s A.
  3. Add up your total team member costs for that group (compensation, benefits, bonuses, etc.). That’s B.
  4. Take B/A. You should then have an idea how much the cost is relative, for example, to the metric (transaction created, dollars entered, line created, and contact made).
  5. What’s your number?

If you aren’t already tracking these metrics, you’ll likely recognize a few surprises with respect to how much some of your team members are doing vs. others; and these are facts you wouldn’t have without the data. These create a great opportunity to recognize your superstars and give lesser performers clarity around your expectations and best practices.

Consider sharing these metrics with your team members as weekly KPIs so they see their performance and create true productivity goals for themselves. These facts also facilitate transparent conversations when business slows or increases, requiring hours to be cut/increased to keep up with workflow. Another positive consequence can come from your team members themselves; they’ll start giving “lean” feedback on things that slow them down and hurt their productivity, because being held to a metric always changes behavior.

You can also analyze when the work is being completed during the day. Every input into your ERP software is tracked with a timestamp, so you can export the data into a timeline productivity review. This is always good information, but it’s even more helpful when analyzing your team’s performance when they’re working from home. If a team member is doing 95% of their input in a 2-hour window, you can’t help but wonder what they are doing during the other 6 hours of the day. Most managers pick up on other trends in the data that they’ve never considered, and these will likely create insights around efficiencies in your strongest team members, new recommendations for lean communication, and improvements to staffing schedules.

Management by metrics logic works in every aspect of the company. Everyone should have a metric goal for themselves that they know and can receive frequent, or even live, updating. Imagine if everyone had greater clarity around company expectations as well as their contributions and performance:

  • Yard team – lines per hour/$ per hour
  • Drivers – Miles Driven per hour
  • Outside sales – margin % after all-in comp
  • Purchasing – Purchases per hour

Not only should the management team know the metric goals, so should each of the team members.  “What’s your number?” might be the answer to your current most urgent necessity.

 

Shane Soule works for LBM Partner Services and consults with LBM and component companies to increase profits and customer/team member experience. He has been in the LBM industry for 22 years and has experience in sales, operations, and manufacturing. 

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