The Pulse of Business Metrics

The Pulse of Business

Helping business leaders to identify the right metrics (key performance indicators) is a core part of my business coaching practice.

Clients often ask me, “How frequently should we be viewing and discussing our Metrics?

It really depends on what I call “the pulse” of each functional area in your organization and the pulse of the Metric itself. I am referring to how frequently you need to get out your stethoscope, listen to the heartbeat, and “take the pulse” of each measure to ensure it is healthy.

(Note: I use the terms Metrics and KPIs interchangeably – but prefer to use Metrics these days in an effort to reduce the use of 3 letter acronyms).

The 2 key questions to ask yourself for every Metric is:

1. How frequently is the data updated? and

2. How frequently do we need to take the pulse of this metric to ensure it is healthy, or take corrective action in a timely manner?

The pulse will most likely fall into one of three frequencies: daily, weekly, or monthly.

Weekly Pulse.

For most Metrics, a weekly pulse is appropriate. You conduct a weekly team meeting to take the pulse and discuss the health of these numbers to make sure things are on track.

For example, if you had a team of salespeople in the field, you might be interested in tracking a Metric of the number of face to face client meetings the reps have each week.

It usually makes sense for the sales reps to enter their calls in your CRM on a daily basis, and have the data sum up to provide a total number of calls by the end of the week.

Due to travel and scheduling, the sales reps might have busy days, and not so busy days out there on the road. That’s fine. If I was the sales manager, I would not be interested in viewing and discussing the volatility of their appointment numbers on a daily basis. All I want to know is whether or not they are doing an honest week’s work, and achieving the agreed number of appointments by the end of the week.

I also want them to know that if they have a target of (say) 20 appointments per week and it’s Thursday and they have only done 12 appointments so far, that they need to lift their game and have a big day full of appointments on Friday. They know their score will be visible to everyone on the software dashboard at the Monday morning weekly team meeting.

Also, if their appointment Metric score is “in the RED” from last week (using the traffic light concept), there will be consequences. I will be shining a spotlight on their score at the meeting and holding them accountable. “What’s happening here?”

By taking a weekly pulse and having these discussions at the weekly team meeting, a sales manager can identify and take corrective action to fix any below-standard performance levels, before it negatively affects sales results for the month.

Daily / Real-time pulse.

For other Metrics, taking the pulse on a real-time or daily basis might be mission-critical. You could discuss these metrics at the Daily Huddle so you can take any corrective action immediately, or asap within 24 hours.

For example, if you deliver physical goods to your customers, you might be interested in tracking what percentage of your deliveries were received in full and on time by your customers on a daily basis (DIFOT = Deliveries In Full On Time). If you see the DIFOT number slip into the RED on any given day, you would want to ask “What’s happening here”? If there is a problem with your stock or your logistics, you can intervene to fix it promptly so you don’t upset too many customers.

Monthly pulse.

For other Metrics, taking the pulse once per month might be sufficient. Some of these Metrics might be financial ratios or formulas that require your monthly financial statements to be completed before they can be accurately calculated, viewed, and discussed.

Alternatively, some aspects of your business may beat to a monthly rhythm, and it may only make sense to take the pulse on a monthly basis.

For example, many businesses operate a monthly billing cycle and are happy to track Accounts Receivable Days as a monthly measure. Some refer to this measure as Debtor Days, or Days Sales Outstanding. It is a measure of the average number of days that your customer invoices are outstanding before they are collected. The point of the Metric is to measure the effectiveness of your credit policies and cash collection efforts.

That’s not to say Accounts Receivable Days should be a monthly number. Other businesses track this Metric more frequently.

Quarterly Numbers.

If you only need to meet to view and discuss a number once per quarter, then it is not really a Metric (KPI) in my opinion. It might be an important “outcome” for you, but it’s not something you can manage on a day to day, week to week basis. These numbers tend to belong in the category I call Numerical Targets.

Regardless of the pulse of each metric, make the key metrics visible to everyone on a software dashboard, and book a recurring weekly 1 on 1 meeting with each goal owner to discuss the health of the metrics they are accountable for.


Until next time…