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Your Business: If You Can’t Measure It, You Can’t Control It

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Business Advice

“Tell me how you measure me, and I’ll tell you how I’ll behave.” 

It’s plain common sense. People work according to the way you measure and evaluate them. Measured sales goals and incentive programs help sales people achieve the targets your company need to be successful. ValleyCrest rewards accident-free employees with a draw for brand new Ford Rangers and has experienced double-digit improvements in their safety rates. Why are safety records getting better? Because employee performance is measured and rewarded.

Measurements work two ways. Done right, measurements analyze Key Performance Indicators (KPI’s) and communicate success rates throughout the company.  If your company is giving away new trucks as rewards for safety success, there is no doubt that safety is important to your company.  However, not measuring has exactly the opposite effect.  If you don’t think it’s worth measuring, your employees won’t think it’s worth improving. 

As owners and managers, it is our responsibility to inspiring employee performance that delivers best-in-class results.  Unfortunately, most employees experience one single metric at their job: their hourly wage. 1 hour worked = 1 hour pay. You don’t have to be a psychologist to understand why you’re going to have problems improving productivity. Your employees are thinking:

“You want me to work faster and harder? I’ll work harder and take home less pay, so you can take home more. No thanks.”

You can argue this thinking is short-sighted, but you can’t argue that this is the most obvious conclusion. Your staff will nod their heads when you preach productivity, but they will resist change. Average staff will simply seek the perfect balance of working just hard enough to avoid trouble. And why should you expect any different? How many of you would want to work for a customer who insisted you get the same job done in 20% less time, and passed all the savings back to the customer?  

Tell Me How You Measure Me…

At a recent visit to a Caterpillar plant in North Carolina, I was reminded of the value of measurements and communication. 

Quality and production metrics were posted down a walkway running the entire length of the plant and at every major workstation.  Sales and production numbers were posted and graphed. Problems were charted, and included who found the problem and how the cause of the problem was solved. Every important number about the plant and its performance were obvious for everyone to see. Skipping out on your training? Training reports posted at every workstation show exactly who has and who has not completed required training.  Employees could not hide from results. The people and teams at the plant all lived and breathed their results.

Most employees of contractors see only one result – their hourly wages. Employees don’t know current sales goals or actuals – and many owners don’t either!  The lack of goals and measurements means you can only use simple wage systems that actually penalize employees for improving efficiency. Employees don’t see or experience any difference between billable hours and non-billable hours. Equipment repair expenses are meaningless. Rework and warranty work actually rewards employees with more hours. There is no employee training program. And worst of all, no one cares enough to measure or evaluate any of these inefficiencies.

Out of Your Head… and Into the Hands of Employees

Trying to run a business without measurements is like piloting a plane without a fuel gauge.  You can make calculated guesses based on experience, but you have no real data. As you grow your business, you depend on others to make good decisions, but they don’t have your experience. Their calculated guesses are, at best, “different”. 

If you really want to develop better employees, you must show them what ‘better’ is.  You might know ‘better’ by instinct, but that doesn’t mean your employees will. Sharing metrics does not mean you have to open up your books to the entire company. It does mean that you need to use the key metrics that you know will improve your company and lead your employees to perform to those measurements. The more you communicate measurements, the more people will understand and share the responsibility for success. Here are some sample metrics you might consider communicating in your company:

  • Sales To Date – Post company sales targets vs. actuals. Separate upsells into their own category to inspire greater results. Even better – post production sales numbers by crew.
  • Productivity Rates – What are your total sales $ per payroll hour?  Is it increasing or decreasing?
  • Labor Ratio – What % of sales are spent on labor costs? Using this number, you can implement a payroll system that pays employees what they are worth, based on a % of their production.
  • Customer Satisfaction – What percentage of your customers would definitely recommend your company to a friend? Post customer satisfaction rates by crew. The Brickman Group attributed much of their growth to defining their success by this metric.
  • Safety  – Which crews have the best safety records? Who is completing required safety training?  Who isn’t? 
  • Suggestions + Improvements – Get everyone making small improvements by posting improvement solutions.  Inspire the best contributors with gift cards, cash, or other special bonuses. As your business grows more successful across the measurements, financial results will improve. With improved financials, you can reward your best people appropriately, and attract and hire the best available people. Better people will continue to improve key measurements, which will further improve results, and the cycle can keep turning. This process is truly about building a business rather than just a job.

If you’re like most owners, you can’t do everything yourself.  You can’t grow your company while also shouldering the responsibility for ensuring everything gets done right. But if you don’t measure, communicate, and reward results, then don’t expect anyone to share your goals or your passion. At best, you smother ambition and potential in good employees. At worst, you’ll lose your best people to competitors who go the extra mile to engage employees in the success of their company.

Want to know your business better? Want to engage your employees?  LMN (www.landscapemanagementnetwork.com) is an online suite of tools and training built for great landscape contractors who want to build great landscape businesses.

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