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Performance Metrics That Matter: Performance, Profit and Purpose

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By Kim Shepherd, CEO
With Tom Brennan, Senior Writer

Performance Metrics for a Performance Driven Workforce:  Why it’s Better than TQM for the Service Industry

Part 3 in our series: The Performance-Driven Workforce: Performance Management Just Got Served

Don’t let the title fool you: I’m not really suggesting we chuck Total Quality Management (TQM), Six Sigma or the other great continuous improvement philosophies. However, as I explained in Part Two of this series, I think the Performance Driven Workforce is more meaningful for today, especially in the service sector. If you missed Part One, I wrote about why we chose the performance driven workforce when we took Decision Toolbox (DT) 100% virtual — the two are a great fit.

Simply put, the performance driven workforce is based on linking at least a portion of your people’s compensation to performance. To create our performance driven workforce program at DT, we used the five Ps as a framework for performance metrics. In Part Two I covered Process and People; now let’s look at Performance, Profit and Purpose.

Performance: Just do it well

Performance is what your team must do to delight customers, both external and internal. The key is to define performance clearly, determine how to measure it, and decide on rewards and consequences for particular levels of performance. Really important: make sure everyone understands what’s expected. Now you need to monitor it, celebrate the successes and hold people accountable when they fall short.

This is where the performance driven workforce differs from TQM and the others. TQM and Six Sigma methods emphasize a proactive approach to integrating the philosophy into the business’ culture. But by giving every employee a vested interest in delighting the customer, you integrate the performance driven workforce into your culture organically. But don’t stop being proactive about maintaining a great culture.

You can get creative about the variable compensation, but you need to make sure the rewards and consequences have real value. At DT, for example, Recruiters are assigned projects based in part on their performance index: higher index = more work = more revenue. Prizes are for contests, and those are fun, but for the performance driven workforce to work, you should tie a significant portion of compensation to performance.

Profit happens

Process, people and performance drive profit — as I wrote in Part 1, profit is an outcome, a by-product. It’s not just for the owners, though. The whole idea behind the performance driven workforce is to give everyone a vested interest. Heck, we even reward channel partners outside the company. Don’t get me wrong: the variable compensation in our the performance driven workforce program is based purely on performance, and not on profit. But consider: it may seem counter-intuitive, but in a month when all employees perform well, your actual profit margin might be a little lower than in a month when employee performance is so-so.

But I see that as an investment in future business, with a stronger ROI than you’ll get from any marketing. Nothing generates more business than delighting the customer. I’d rather pay my people to delight than pay an agency to advertise. And it shows your people that your money is where your mouth is.

Purpose and meaningfulness

Have you ever met a business owner who said her sole reason for running that company was to make money? There are lots of easier ways to make money than owning a business! Have a look at Simon Sinek’s TED video, “Start with Why.” He makes a compelling argument that highly successful companies and people start with the Why, not the What.

People want a purpose in addition to money in order to find meaning in their work. For several different perspectives on meaningfulness at work, see a recent blog series by members of DT’s leadership team. But to give you a couple of examples, Jay Barnett founded DT 20 years ago because he believed there was a better way to do recruitment — we’re still looking for how we can be even better. A big Why for me personally is that running a successful company allows me to make an impact in the philanthropic community.

In my next post I’ll explain how the performance driven workforce helps ensure that performance drives seamless processes, from qualifying a potential client to ensuring client satisfaction at the close of the engagement . . . and beyond.


Connect with Kim on Twitter and LinkedIn.

To learn more about Decision Toolbox, please contact us – we’d love to hear from you!

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