In Defence Of KPIs
Written By Simon Moss
A strange love of metrics
Or how I learned to stop worrying and love KPIs
I’ve worked in the recruitment industry for over 20 years. During that time I’ve recruited through Y2K, global recessions, local recessions, 9/11, SARS, the .Com bubble, the GFC, political upheavals, wars. I’ve recruited through multiple boom times, personal periods of brilliance, periods of personal tragedy and a fair bit of just normal middle of the road times. I’ve always done well. Not ‘set the world of recruitment on fire’ well but ‘consistently through all market cycles’ well.
I’ve seen a lot of ‘set the world on fire’ recruiters in the boom times. And unfortunately they rapidly become ‘go and do something else’ recruiters once the boom times end.
So what is the key to consistent success? KPIs.
We are currently in a boom time for recruitment. It’s a hotter market than we’ve seen in 10 years. But, if you’re in the first 5 years of your recruitment career I'm sorry to burst your bubble, this won't last. This too, as they say, shall pass.
But as always happens in times of boom, there are those out there decrying KPIs. “The death of recruitment” they cry, “Micromanagement” they state. But, and I say this not to be a negative nelly but because the global economy works on an inevitable cycle of growth and decline, when all your clients are on a hiring freeze and you’re scrabbling around for jobs like a starving gold prospector in the Great Depression (look that one up if you don’t believe me about economic cycles) tell me then that KPIs are a bad thing.
Indicators Not Targets
A KPI is an indicator of key factors of your performance. That’s all they are. Sports people have KPIs, all businesses have KPIs, every job has its own KPIs. KPIs bring balance. Without KPIs we chase the quick wins, the low hanging fruit and the squeaky wheels. But KPIs, if they are good KPI’s, bring us balance and ensure we do the long-term as well as the short term.
And this is the crux of my argument. I believe that the debate is not for or against KPIs but should be about bad vs good implementation of KPIs
In a down market when you can go for weeks without pulling a job, KPIs can be the only things that keep you sane. Everybody needs to know if they’ve had a successful day. If your only measure of success is sales then you will burn out pretty quick. But having daily metrics to hit gives you something you can achieve, something to keep you positive, lets you know that your day, however frustrating, has moved your business slightly forward. And if you keep achieving small daily wins then you will keep achieving big monthly sales. And you’ll beat your demotivated competitors.
One Size Does Not Fit All
KPIs also help in the boom times. Don’t get me wrong here, businesses that run a ‘one size fits all’ approach to KPIs will crush their people. These are what our industry calls “KPI’s” and they are terrible. They crush creativity, they crush accountability and they crush billings.
But well thought out KPIs that follow a few simple guidelines can ensure that someone works a balanced desk, that short term and long terms objectives are balanced, that a manager can see, at a glance, when to leave someone alone and when to step in and offer guidance. That is the power of good KPIs. They set you free. Nobody likes being managed when they don’t need it, but also nobody can turn down guidance when the numbers show they need it. KPIs allow this to happen.
For recruitment KPIs to be successful they need to follow 3 simple guidelines
1. They need to be f%$#@&%g simple
2. They need to be exactly the same for everyone at all times
3. They need to be different for everyone and adapt continually
1. If they aren’t simple then people don’t understand how they can benefit them, if they don’t understand how they will benefit then they avoid them or pay lip service to them
2. Everyone needs to know, at a glance, how everyone else is performing against their KPIs. Everyone should be accountable to everyone else. If they are different for everyone doing the same job then who can tell who is on track. It then becomes complicated to measure and record and compare. See point 1
3. Everybody’s style, desk, stage of business is different. And this changes from week to week. Having a 1 size fits all approach hinders people. Someone who has 1 big client who gives them enough business doesn’t need to be driven by the same numbers as someone with a new desk in a new market. It's insane to think they can have the same metrics. See point 1
It is possible to balance points 2 and 3 without breaking point 1. It took us a few years to figure it out, but we did it. I’ll leave that one with you to figure out for the specifics of your business but for KPIs to work, figure it out you must.
Keep It Simple
If a KPI isn’t simple, if people can't tell at a glance how others are doing (and know others can see how they are doing), if they aren’t completely bought into its relevance to themselves, then any consequences of not meeting those KPIs are empty threats. Like the nuclear deterrent in Dr Strangelove (see, the title is relevant), if everybody isn’t completely onboard and aware then it’s an empty deterrent that ensures mutual destruction.
KPIs should be backed by leading indicators which themselves cant be KPIs. I believe that in recruitment there are about 8 KPIs from which all sorts of useful ratios and data can be drawn. Each of these has multiple inputs and outputs. You can measure all of them all of the time, but the key is figuring out which ones are important and when to focus on them. If something isn’t important then let it go, focus on that which is driving or preventing success. Everything else is noise.
For instance. I like new jobs as a KPI. But leading indicators of this would be phone time or a number of BD calls.
For me the KPI here is the number of new jobs through the door. But as a manager, if somebody isn’t hitting their KPI then I can peel back a bit and look at the leading indicators. I can see pretty quickly if the issue is quantity or quality.
If phone time is low, the number of business development calls is low AND they don’t have enough jobs on then they aren’t doing enough. Action point: give them a kick up the a@$#e
If phone time is high, they are calling lots of prospects AND their jobs are low then the issue is that they need some help with the content of their calls. Action point: make sure they are OK, encourage them and give them guidance and training.
If they have enough good quality jobs on who cares how many BD calls they are making. If they are smashing their sales month in month out and are building a sustainable business who cares how many jobs they have on. KPIs are indicators, not commandments written on tablets of stone.
For me, KPIs are about 2 things
1. Creating daily wins – allowing someone to know, at the end of each day, that they have moved their business forward slightly in a sustainable manner
2. Allowing managers to leave people alone unless they need it
Without good KPIs (or with bad KPIs) people, both recruiters and managers, become busy fools. Recruiters spend hours doing things that won't make them money and managers spend their time managing people who don’t need it and not managing people who do.
In my 20 years in the industry, I have never seen a consistently successful recruiter (through good times and bad) who did not work to either organizationally imposed or personally imposed, well thought out, KPIs.
Finding the activities that drive your business forward, the things that you need to focus your time and attention on before anything else, and then figuring out how much of that stuff you need to do and then asking someone else to keep you accountable for doing that (because you know that you, like everyone, are easily distracted by shiny things) is good business sense. That’s what KPIs are. Nothing more.
If you work for an organization where you feel KPIs kill your productivity, that isn’t the concept of KPIs you should be decrying, it’s the organization that doesn’t know how to use them and is dogmatically clinging to badly thought out metrics.
KPIs will set you free.
Badly implemented KPIs will enslave you.
Find the right KPIs that fit the 3 criteria I outlined, find an organization that understands the 2 reasons for KPIs, hit those KPIs consistently through good times and bad and I guarantee that you will be sat here in 20 years, having been a consistent biller, sounding like a right old bastard, telling everyone how good KPIs are.