Has the COVID-19 situation revealed the weak links in your team? While most of your tradies have shown up with a can-do attitude, grateful to have a stable job through the uncertainly, the true colours of others have shone through — and it’s weighing heavily on your mind and bottom line.
If you’re trying to get your trade business back in the profit zone post-pandemic, how are you tracking employee performance? In our trade business, we set employee targets using KPIs or key performance indicators — to understand whether they’re killing it or veering off route.
KPIs for your tradies
KPIs are important for accountability purposes, providing you, as the trade business owner, with information you can draw on to analyse, review and assess individual employee performance against your defined goals.
KPIs should:
- tie into your overall business objectives
- measure areas that’ll influence the success of your business
- identify areas requiring further action.
Your employees’ worth cannot be reduced down to just a number.
However, if an employee is consistently underperforming and the situation can’t be salvaged — you’ll have to data to help inform you of any decisions about the employee’s future in your business.
Which KPIs should be tracked — and why
Setting achievable targets for your team is essential. As the trade business owner, it’s up to you to track which employee performance KPIs matter to you and your defined goals and objective, using a Staff Performance Dashboard.
Here are four examples of KPIs we track at Dr. DRiP Plumbing:
1. Revenue per employee (we call it: Total invoiced out)
This is a measure of what each employee brings in — and is an actual figure — not calculated as an average. It establishes whether each team member isn’t costing you more than they’re making you.
2. Profit per employee (we call it: Gross profit)
This employee performance KPI breaks down profitability (free from expenses). It measures how much money each tradesperson is bringing in each day/week/month over and above your break-even point.
3. Employee billable percentage
This KPI shows you the overall ratio of directly profitable work to internal cost each employee engages in. It demonstrates the relationship between “billable” and “non-billable” time, in an effort to maintain a healthy balance.
4. Overtime per employee
The overtime metric can be interpreted in different ways. For us, we monitor how many hours a week our tradies are working. Overtime is both paid and a necessary part of the job in a trade business.
Quick KPIs checklist
In our trade business, we track performance indicators every week and review KPIs with team members on a monthly basis, using our job management software, AroFlo reports and accounting software, Xero. You or your team will input accurate data to your Staff Performance Dashboard.
Before you get started, ask yourself the following questions:
- Are your KPIs should be easy to understand and measure?
- Does your team know why KPIs are important?
- Have you clearly communicated KPIs and expectations?
- What does accountability look like?
- How frequently will you track and review KPIs with team members?
- How will you track the data?
Ultimately, KPIs are for learning and decision-making, not personal judgement. They’re designed to drive collaboration and continuous improvement, not instilling fear within a workplace. Getting employee buy-in is the ‘key’ to KPIs — and critical to creating a high-performance team.
What’s next?
- Download our Survive the Sh*t Storm resources, which includes Lifestyle Tradie’s Break-Even Analysis Guide for Tradies, and our Cash Flow Guide for Tradies.
- Join our free Kick-Ass Tradies Facebook group to learn how to set team targets using your business’s break-even point.
