Earlier this year, I began a journey within my businesses. I set out to solidify, strengthen, and condense the KPIs, PIs, and KRIs in the companies. As I embarked on this journey, I decided that I wanted to share my experience with you. I wanted to give you an authentic look at me as a business owner. Through this process, I hope you gain some valuable insights into approaching this task within your own company. Fortunately, I haven’t had to do this on my own. My incredible team has aided me, and today, I’m sharing what I’ve learned about leadership KPIs from my friend and colleague, David Kent.
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I am blessed to be surrounded by an extraordinary and talented team. As I’ve gone through this journey, I’ve been able to sit down with several of them to discuss the various KPIs that they track in their area. While researching leadership KPIs, I turned to David Kent. David is the Director of Business Planning at Heritage Business Advisors. In this role, he has coached many business owners and department heads on the principles of leadership.
David began his career working for a large non-profit organization before transitioning into the corporate world. During this time, David learned many of the management and leadership skills that have prepared him for his role at HBA. I can truly say that David’s leadership coaching has impacted my life in such a profound way that it has given me freedom as a business owner. Likewise, I’ve seen the same type of results for many of the business owners that he has coached through Heritage. So, when I got to the leadership portion of my search for KPIs, I knew that David was the guy to talk to.
The idea of a leadership KPI might sound odd to you. I mean, how does one really track leadership? It might be helpful to think of it in terms of how it impacts your organization’s value. Leadership is all about growing the internal or intrinsic value of the business through the development of people.
With that in mind, we have five indicators that we track in the leadership department. It’s much harder to measure leadership because it is subjective. You’re measuring people. So, that’s why leadership has far fewer indicators than operations, marketing, etc. However, like these other departments, leadership does have past, present, and future indicators.
One example is an employee survey. This is a past or lagging indicator, as it reflects what has already occurred. For us, the employee survey gives us a great insight into what we are doing well and what needs to be improved upon. Through this indicator, we find out what the team would like to be done differently regarding their development. Now, it should be noted that we write the survey to make the team feel safe. We want to have candid and honest feedback; so, we give them some anonymity.
Likewise, we have future indicators. At Heritage, we love continuing education. Therefore, we budget money to empower our team to expand and further their education and training. We know that we want to move in a certain direction, so we have to make a path for that to happen.
Each business has indicators that are key to its success. At Heritage, we’re no different. I asked David which of the five indicators he thought were the most important to track within our business. His answer might surprise you. David told me that the most important leadership KPI that he measures is one-on-one meetings with the directors. Now, he emphasized that this didn’t include five-minute conversations as you’re walking by their offices.
Instead, these meetings are intentional and targeted. During the one-on-one, you should discuss the problems impacting their individual departments and potential solutions to them. Likewise, there needs to be a conversation about their interests in their personal and professional development. Team meetings are great. They’re useful and necessary. However, the one-on-one meeting gives you greater insight into the problems in each department, and into your team members, as individuals.
To be clear, we still aim to remove the business owner from the center of the business. With that in mind, it isn’t necessarily the business owner that needs to be conducting these meetings. Instead, you should be identifying the leaders within your organization and empowering them to take the lead with these meetings. Within our own organization, each leader is responsible for tracking this. They track each meeting every month using the calendar software that we use in the office.
Almost as important as one-on-one meetings is the amount of time and money invested in your team’s education. This is an easily tracked KPI. At Heritage, we track this KPI annually, using enterprise resource planning (ERP) or financial software.
It’s important to track this because it is a primary indicator of how well your team is being developed. It’s not only beneficial to your business, but it also shows the team just how much you value them. A continuance of education and development is an investment into what is likely your greatest asset, your team. Matthew Kelly’s book, The Dream Manager, discusses how you can help every person in your company reach their dreams through the business itself.
Because we, at Heritage, operate in an advisory capacity, we must keep up with our certifications. If we aren’t educated on all aspects of personal and business finance, we can’t offer expert advice. So, the number of hours spent on continuing education and keeping up our certifications is a unique leadership indicator. Other industries may track a similar indicator, but only a handful can truly consider this a key performance indicator.
Regardless of your particular industry, there are always a handful of universal indicators that you should be tracking for each department. We only track five indicators within our business, but we feel that each one should be tracked in every business.
I hope that this series has been as eye-opening to you as it has been to me so far. There are so many indicators that can tell you so much that it can be difficult to nail down which ones are key to your business. So, if possible, do as I have done. Speak to the various department heads in your organization to find out what’s being tracked in each area. From there, it can become easier to understand which indicators are truly key to your success.
Friends, life is hard. But life is good. Likewise, leadership is hard. It can be frustrating. If you say or do the wrong thing, you can create all kinds of problems. But if you measure these indicators, you can make leadership, at least financially simple.
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