We hire people to produce wealth for our business. But, how do we make sure each employee is producing and perpetuating profit for our company? We use Key Performance Indicators (KPIs) for employees — quantifiable measures for evaluating the success of an organization or employee in meeting performance objectives.
This is an important gauge of how well your business is doing, but the term KPI is often misused in our industry. In fact, when considering how to create key performance indicators, a better term to use is Key Results Area, or KRA. This can be a more inclusive way to show our employees that we are measuring the health of our business based on results, not just performance.
In this blog, we’ll discuss:
- Determining and establishing KRAs
- How to clarify roles in the workplace using KRAs
- Using KRAs to measure successes and trends within your business
Measure what matters
Typically, we as leaders do a bad job developing KRAs because we aren’t prepared when we hire employees to begin with — we outsource as much as possible or we copy what another business owner has done and we end up measuring the wrong things. For example, if you are a provider with two employees, talking about revenue per square foot is a huge waste of time.
Instead, evaluate yourself first. As a leader, what are your KRAs? In other words, what should you be doing that brings value to the business? If you aren’t clear on how you should be spending your time or what optimally impacts your business, how can you possibly assign key performance indicators for employees?
Create key performance indicators for employees that empower them in their roles
In the beginning we often hire people to do a job without knowing specifically what tasks within that job will directly produce profit. Early on, employees tend to wear a lot of hats because we just need help, and we base performance on one metric, like sales, or on our opinion instead of hard data.
Have you been in this position with your employees? The key to building a team is to give them a blueprint to follow, and that blueprint is established with KPI or KRA. Each employee should have a few KRAs that they can memorize — they should know a high level overview of what results they are responsible for producing.
For example, a manager’s KRAs may be:
- Maintain 30% profitability
- Manage business financials
- Develop a growth strategy
- Lead the team so they have strong momentum toward our goals
Then, outline which duties are expected to help achieve those key performance indicators for employees. Start with your own role and then work your way down the team, listing bullet points and categorizing them into specific tasks.
Sometimes we get stumped on non profit-producing roles and determining what kind of direct monetary impact they’ll have. In our POP Aesthetic Leadership Academy, we design “catch all” job descriptions that clearly communicate what employees should be held accountable for.
Lay out expectations that each role should deliver on, then create measurements assigned to each specific role or function within the business. Start by understanding your big vision goal and reverse engineer it into quantitative and qualitative objectives. You can do this by answering four important questions:
- What are the core vital signs of my business?
- How do I know that we are tracking them?
- What are the core vital signs of this role?
- How do I know that we are tracking them?
Ultimately, KRAs are only as good as your goals and the work you’re doing to achieve them. For example, we work with a solo injector on the East Coast who is building her business. She is not fully booked, so we are diligently tracking lead sources and finding ways to increase the percentage of word of mouth referrals. We’re focused on quality leads that bring in repeat business and patients who invest in long term care.
As your business advances, it becomes increasingly important to have routine scheduled meetings with your team members to evaluate what’s working and what’s not. What obstacles have prevented them from achieving set goals? What has changed? What resources do they need? KRAs should be evaluated and adjusted, at minimum, on a quarterly basis. Remember that you’re growing and evolving as a business, so should your people, and so should the objectives you hold them accountable to.
Keep your finger on the pulse of your business with a health check
When you go to the doctor for a health assessment, you get a quick overview of how your body is doing. These results provide a high level diagnostic of the health of the body. For example, if the heart does not function properly, it could shut down the rest of the body.
Your business is similar. Your KRAs might include metrics such as revenue, profit, patient retention, or compliance — just three to five metrics per role that are in alignment with the overall goals of the company. This is how to clarify roles in the workplace and outline expectations.
Once you have done the work to understand what KRAs should be measured, then you can build your monthly dashboard to track and measure trends. This will help you interpret the story that the data is telling, just like a health assessment interprets the story the body is telling..
So often, the problems we think we have are simply a symptom of a bigger problem. For example, you might be dead set on measuring your conversion rate, but you’re bringing the wrong clients in the door to begin with. This is more likely a brand positioning misalignment than a team member’s inability to “close deals.”
Redefine success with relevant KRAs
Think deeply about what you want out of your business. Is it revenue and profit? What about pleasure? What about joy in the process of growth? What about free time? What about research or reading or vacation? Who is measuring this? Don’t get distracted by pinning yourself to some random person’s KRAs.
If you are looking to get some strategic guidance on how to translate the vital signs of your business into tangible metrics you can book a call with our team to learn more about our POP Aesthetic Leadership Academy and specific strategies to better optimize your current operations to create a win-win culture for your business and its people.
Subscribe to “The Blueprint”, the official KLC Consulting weekly newsletter curated to support, educate, and encourage powerhouse female entrepreneurs in aesthetics & wellness