Key Performance Indicators and your business

By John Corban

Why are Key Performance Indicators (KPI’s) important for your business?

A KPI is known as a key performance indicator. It is a measurement of the way your business is performing. A good KPI tells you whether your business is heading along the right path or not, toward your vision and goals. 

In this article, I will explain and give examples of KPI’s you can use for some of the key areas of your business to ensure your business develops the way you intended.
 
Boost staff morale and productivity
It is important that your staff enjoy their work, the environment they work in and are continually productive while maintaining company standards. Setting KPI’s for every employee is a crucial component to ensuring productivity and that morale remains high.

Why should this happen? Because every team member will be clear about what key objective/s they are expected to achieve each day/week or month, and both you and that team member will have a defined method of measuring those expectations.

The problem in many businesses is that many employees don’t clearly know what is expected of them. It can often be a grey area, so they may work at an average pace because no-one has set definitive targets or objectives for them each day and each week. 

Here are some examples of KPI’s for employees:

• An estimator has to quote a certain total dollar amount each month, e.g. $300,000 in projects.
• A maintenance team leader has daily and weekly schedules and must complete a table with hours worked on site – client details, hours in travel, total hours worked for the week etc., then you both can see and understand how they compare each week.
• A maintenance manager has to complete three garden reviews each week.

When employees know what is expected of them each week in quantifiable terms, they will be more driven to meet those KPI’s. There will be a sense of ownership in their work and recognisable evidence of their contribution to the team. This boosts productivity and morale.

Each employee should have two to five KPI’s they should complete each week/month. Their KPI’s should be achievable, measurable, properly explained and agreed upon. When starting out setting KPI’s, set fewer rather than many. Too many will probably de-motivate the employee for whom they were intended.

Increasing profits
Other important KPI’s are to know your biggest costs in your business and to set targets to reduce them.

Expenses like overheads, materials, wages are generally the biggest costs. Wages and materials being the biggest two. Get to know one of these major costs in relation to income each month. An example might be $100,000 income for the month and site wages are $37,000. So, the percentage of wages to income is 37%. An aim would be to reduce site wages by 1 or 2%, so a wage % KPI might become 35%. The reasons for higher site wages are poor planning, mistakes, poor training, poor documentation etc.

You can set up and monitor KPI’s for all areas of your business. But if you are not utilising key KPI’s every week/month at the moment, I suggest you create some simple ones for staff first and later set one for making more profit. 

KPI’s will help you know if you are moving towards the goals and expectations you have determined for your business, and they allow your employees to work each day knowing exactly what is expected of them while feeling more motivated to achieve. 

John  Corban
Business Coach for Landscapers,

Horticulturists and Nursery owners
Mob: 0433 27 1980