“I want a pay rise!” How to use KPI data to measure performance

Andy
Most of us already have some form of KPIs for our business, even if it’s just a turnover and a profit target each year. But the question I wanna ask you, why do most trade business owners we speak with have no KPIs for their team?

Ange
Well, I imagine it’s simple, really, that before today, nobody has ever said This is something that you needed to be doing in your trade business. It’s like saying, you just don’t know what you don’t know.

Andy
Yeah, that’s right. Staff management certainly wasn’t taught to us at TAFE, and most of us have spent our lives on the tools, not in a classroom or office, so why would we know anything else?

Ange
Yeah. On top of that, it’s unlikely as a tradie yourself that your old boss set your KPIs, so you’ve got zero experience with them. Whereas I come from the corporate world where staff KPIs were absolutely common practice.

Andy
I honestly just thought it was for a big business with hundreds of staff, and you’d never use it for a small business like mine.

Ange
Yeah. So for me it seemed crazy that in a trade business where your team are often in their vehicles or onsite alone, that we weren’t tracking their performance. You’ve got absolutely no idea what they’re doing.

Andy
So we took your personal experience with KPIs and implemented them into our trade business, Dr. Drip. Now, we track key performance indicators every week, and we review them with every team member once a fortnight.

Ange
This review isn’t to make the team feel like we’re spying on them. Instead, we use KPIs to show them the facts. Basically the hard data about who in your team is killing it, who’s letting you down, and where there’s room for improvement.

Andy
It’s sometimes so deflating as a business owner when you work so hard, only to hit the end of the year to find out you made little or no profit at all. And that’s why tracking data, Having indicators or KPIs is absolutely essential for you and your team.

Ange
Yeah. Even if you only have one staff member, you should still be tracking their performance. And you know what? Even if it’s only you on the tools, it’s still vital that you set targets for yourself because no one else is gonna keep you accountable.

Andy
The number of tradies I talk to and they tell me how busy they are and how they’re running around like a chicken with their head cut off, but what have they actually achieved in a day? You know, so many of them don’t even know what they achieved. They don’t even know how much money they’ve made. They don’t even know what they don’t know.

Ange
If they actually knew what they were aiming to achieve, then things would look so different.

Andy
I’m sure there’s a lot of you saying right now, there’s no way I want KPIs for my team, let alone myself. I’m the business owner. Well, you know what? I get it guys, but I just wanna say, hear me out on this, because every successful business out there uses KPIs, so there must be some merit to it, right?

Ange
Yeah. I promise you there isn’t one business out there that wouldn’t benefit from knowing the facts in your business and tracking some KPIs. To me, it just makes really good business sense.

Andy
Exactly. Now, not all of you listeners are old like me, but back in my day,

Ange
Oh God, Andy. I hate it when you start that sentence with Buck in my dough makes me feel so old.

Andy
It’s funny, you know, I used to laugh when my parents say it, but now I say it all the time. My 12 year old son is just laughing at me going, back in your day dad. So far, back. But back in my day. The tradies performance was based, and whether he was a good bloke, loved a bit of banner, and he’d put in a hard day’s work. You know, that’s how my old boss measured if I was a good tradie or not. Mm-hmm. And maybe 20 years ago, that was the best way to do it.

Ange
Yeah, because back then there was no such thing as KPIs. The technology just wasn’t there to track it.

Andy
Business owners just had to base it off their gut feeling, because that’s just how trade business used to be run. Hmm. But trade business 20 years ago are just so different to how they’re structured now, with technology and so much competition out there, it’s the small details that set us apart. You need to know for a fact, the exact data to know if your team is letting you down or lifting you up.

Ange
It makes sense that, back then, the world was so different, we didn’t even have smartphones. So really, if your argument for why you don’t need KPIs now is because my old boss didn’t have them. Well, maybe you actually need to rethink that position.

Andy
I just can’t believe how we ran a business back 30 years ago with no mobile phones. You know how times have definitely changed.

Ange
I remember when we first talked about implementing KPIs for the team, and I remember you saying Ange, it’s just not gonna work and it’s all too hard. But you know what? You don’t think that anymore, right?

Andy
No. No. I definitely don’t. I mean, sometimes you are right. Not often.

Ange
You’re so cheeky.

Andy
But I realize now that it’s essential in every trade business to track team performance. For years, I just went on that old, nah, he’s a good bloke and he’s probably doing a good job. But when I finally caved in and started to put some of these KPI tracking systems in place, I realized how many times our guys were actually taking the piss.

Ange
Yeah, right.

Andy
Some guys were just getting multiple callbacks to site for simple errors costing big bucks. Mm-hmm. Others were taking twice as long to complete the simple same jobs, and suddenly I could see on a page that I had some guys who were really passionate, they were doing an incredible job, and others who were just cruising and were taking me for a ride.

Ange
So, I guess it’s fair to say that KPIs are important for two key reasons. One is they keep your staff accountable, and two, they allow you to make business decisions based on fact, not if they’re a good bloke.

Andy
Uh, well, three actually, they are such an amazing motivational tool as well. We’ve spoken before about how to find great staff, but once they’re in your business, it’s your job to keep them motivated and to perform at their peak day in, day out.

Ange
Yeah, absolutely. Keeping your team motivated and keen is essential.

Andy
Yeah. Us tradies seem to all have a competitive streakiness. You know, we love a good punt and getting one up on each other, and we all wanna be king of the jungle. So when introducing KPIs to your team, instead of saying, We are setting you KPIs to watch your progress. Maybe say, we’re gonna set you weekly challenges and reward you for hitting them.

Ange
Yeah, that’s how we introduced it with our team and they really didn’t seem to mind. In fact, I think they liked the idea of some healthy competition. Motivating and pushing your tradies with KPIs is all well and good. But what exactly do you track and where does the data come from?

Andy
That is a great question because you need to start with something simple to get the ball rolling. You know, we’ve shared our Staff Performance dashboard template to show you what we measure with our team of tradies. There’s a link in the show notes, or you can get it at lifestyletradie.com.au.

Ange
So let me take you back to the question. What exactly do we track? So in our business, we track lots of data on our tradies, but the five most common that we track weekly per tradie are total number of jobs, total invoiced out, average dollar sale, upsells and callbacks.

Andy
I know some of you are saying, geez, that just sounds all too hard but it really doesn’t need to take that long.

Ange
Yeah, it acts as a weekly scorecard. Your tradies won’t be perfect every day. They too have good and bad days, but this scorecard shows you how well each tradie performs over time.

Andy
To advance this process, you can just set it up in your job management system. That way it’s super easy to push a button and spit out a report. There is nothing hard about that.

Ange
Yeah. Simple as. So let’s connect the dots to one of the reasons why KPIs are so important. We mentioned that you can make business decisions based on fact, right? Well, I can actually think of one perfect example of this when it comes to your team. So Andy, I’ve got a question for you. When do most tradies ask you for a pay rise?

Andy
I love this one. Well, 90% of the time it’s just after that they have killed a week and they’ve made a bucket load of cash. And they think, you know what? I deserve something extra in return.

Ange
Right. I totally agree. So that said, what does KPIs have to do with that scenario?

Andy
Yeah, in their head they are like, I just made $8,000 for the boss. I deserve to be paid more. Not only do they not understand operational costs, they only see that one job where they think they made a shit herd of money. But based on actual data, you can easily look at their tracking over the past week or month and compare the results with the rest of the team. It highlights that, yes, that may well be doing an amazing job and they may deserve a pay rise or it could also show that this job was just a one-off.

Ange
Exactly. And that way you can also show that guy the facts through data.

Andy
It shows them how they are doing, so that if you say no to the request for a pay increase, you can explain why it’s not gonna happen and what you want them to do now if that’s the result they’re looking for. You know, your decision was made through facts, not just a gut instinct and who can argue with the data.

Ange
Yeah. Wonder if any of you trade business owners listening out there are starting to think, Hmm, maybe this makes a little bit of sense.

Andy
A hundred percent.

Ange
So I’ve got another scenario for you, Andy. KPIs can help make the team better and help with their development. Do you have an example for the listeners perhaps about that?

Andy
It’s the good old saying, don’t blame them, train them. So in our plumbing business, we always set up the tradie who’s coming first for the week with the person who’s coming last for the week. We do this not to make them feel bad, but to give them the opportunity to learn and how they’re gonna turn things around.

Ange
So by pairing the two together, if the person with the poor KPIs doesn’t listen and learn and change their ways, then perhaps this is the time to consider moving them on.

Andy
It’s important to determine if they’re just simply lacking confidence and will grow, or if they actually are just lazy and there’s nothing you can do to fix it.

Ange
Yeah, so KPIs can also help motivate the team with incentives too, right?

Andy
It definitely can. There are a lot of ways to incorporate incentives linked with KPIs. But let me share just two with you. You know, one super simple and one advanced. The simple version is just using a tick system that every time they upsell something, it could be worth, say, $20 to them. Now if they do five upsells in a week, that’s an extra hundred dollars cash in their back pocket. This is the simplest version, both to understand and to execute as a business owner.

Ange
Yeah, we use a simple version like this with our team, and what I love the most is literally how simple and how effective it is.

Andy
Yeah, sometimes the most simple things are often the best, and that’s why I love you, honey.

Ange
Are you serious? Oh God. You’re a shocker. Yes. So back to the topic. We know this simple form of KPI tracking works with our team and we talk about the results at our fortnightly toolbox meetings where the tradies are acknowledged in front of their peers. It gives them a confidence boost and it makes them feel really appreciated.

Andy
That’s right. Our team loves it. They call each other and pump themselves up during the day, when they’ve done a massive upsell saying, I’m the top dog of the week, baby Yahoo . And at the end of the day, we let everyone see the reports. They know exactly where they are placed amongst the team.

Ange
It motivates them to come back the next week and push harder to hit that top dog spot. So tell me about the advanced version.

Andy
Yeah, the advanced version could be a percentage of turnover that they may have personally achieved within a certain timeframe. Like monthly or quarterly. You know, this can be more complicated though, and it takes a lot more time to manage.

Ange
Right. I couldn’t agree more with that. So I think another thing to mention about KPIs is to ensure that they are realistic. If none or only a few of your team are hitting the goals you’ve set, then you actually need to stop and consider a couple of things. Either are they good tradies, or secondly, are your goals realistic?

Andy
Exactly. Because if you set impossible high goals, You’ll have the opposite effect. You know, you won’t motivate your team. Instead, you’ll make them feel deflated. Mm-hmm. , you won’t capture the business information you need, and overall, nobody will feel like they’re a winner.

Ange
So KPIs need to be reviewed all the time. They’ll always need to be tweaked and revisited based on the data you are getting back. But the important thing is to simply start.

Andy
Starting is the easiest part.

Ange
Yeah. I recommend you start with one to five basic KPIs to track your team’s performance. It’s important to give your tradies the best possible chance to succeed.

Andy
And if you’re currently got KPIs set for your team, but you feel like they just aren’t working, then we need to unpack what you’re doing. Perhaps the team is pushing back all the data just feels wrong, then this needs to be fixed too. There is certainly a right and a wrong way to introduce KPIs to the team, and perhaps you just didn’t set it up the right way from the very start.

Ange
Over the years, we’ve done plenty of tests and measures to see what works and what doesn’t, so we’ve got a fair bit of knowledge and experience around this subject.

Andy
I introduce KPIs in my team, so I know they work, but I also understand the hesitation people can have around all of this.

Ange
Yeah. If you’re thinking, Hmm, this is interesting and could work for my business, or maybe you have KPIs but they aren’t working and you don’t know why, then can I suggest you talk with us directly, book in a strategy session with Andy, a one-on-one chat, and let’s fix this once and for all.

Andy
There’s no better time than now to introduce KPIs into your team or make sure you are getting the most out of the KPIs. You already have. Head to the lifestyletradie.com.au and click the strategy session button and let’s chat. I’m keen to hear your thoughts about KPIs and how we can make them work inside your trade business.

Ange
Well, Andy, that’s a wrap for today. So to our listeners, thanks so much for tuning into season three of The Tradie Show, together in trade business. We’ll see you real soon.

Andy
Hell yeah.