Building a Balanced Metrics Portfolio

As a staffing organization grows, management relies on metrics to provide the visibility necessary to ensure the company is staying on the right track.  How effectively an organization develops these metrics has a direct impact on critical management decisions, and thereby, on company performance in both the short and long term.  Because the staffing industry relies on individual performance, most staffing companies have a system of metrics in place.  However, having an incomplete portfolio of metrics can undermine growth since it can misdirect management on solving the wrong problems which can further undermine performance.

The metrics we use act as the lens in which we view the business, so it’s important to ask ourselves does the lens we use accurately represent reality?  Too often the answer is no. Of all the assessments I have done there is always one common theme, the problems I am asked to evaluate are often not the key issues that need to be addressed.  These disconnects between perceived and real problems stem from either a lack of correct metrics or inaccurate interpretation of what the metrics are saying.  Common sources of a poor metrics portfolio include:

Not Aligning Metrics to the Company Strategy:  Many companies use standardized metrics they may get from industry associations or create their own metrics without considering the unique needs of their organization.  Metrics need to be customized based on key success factors of the company’s growth strategy.  While staffing companies all provide the same service, how they sell, deliver, and choose to expand varies widely from company to company.  Customized metrics need to capture and measure the effectiveness of that uniqueness to ensure the growth strategy is effectively executed.

Metrics Portfolio Lacks Balance:  Most staffing companies have some type of metrics they measure the company against.  However, oftentimes the metrics do not provide a complete picture of the organization.  A balanced portfolio consists of metrics that measure overall financial results, the effectiveness of sales and recruiting processes, and the performance level for production personnel and line level management.

Data is Inaccurate:  While Applicant Tracking Systems have come a long way in process efficiencies, they lag behind when it comes to effective CRM capabilities and linking financial and operational numbers.  To work around these inefficiencies, many companies ask employees to self report metrics instead of reporting them out of their systems.  This is a risky practice in that it can provide inaccurate data leading to bad assumptions and bad solutions.  Whenever possible, metrics need to be pulled out of a system that accurately captures activity as it occurs in the field.

Data Isn’t Reviewed Regularly:  Part of managing to data is becoming familiar with the data and being able to identify trends versus one off events.  This familiarity comes from frequently reviewing metrics with the management team and having significant business discussions around their meaning and potential adjustments.  When this is done on a monthly basis managers become more comfortable with the metrics, more skilled at identifying causes of non performance as well as better at distinguishing between a problematic trend vs a one off event.  When metrics are not reviewed frequently, the ability for management to evaluate them in the proper context suffers which negatively impacts decision making.

Metrics Become Outdated:  Since metrics portfolios can become outdated, companies need to challenge the metrics that they use at least on an annual basis to ensure they are still relevant.  Metrics can lose their relevance for many reasons, but some of the most common ones include:

  • Company has reached another stage of growth
  • Company has significantly changed its sales strategy
  • Delivery model changes to meet client needs
  • Company changes hiring profiles for key positions

Building and managing to the right portfolio of metrics is a critical success factor for staffing companies that are continually facing multiple obstacles to growth.  Spending time creating and managing to the right metrics empowers management with the information they need to make the right decisions in order to maneuver through an increasingly competitive business environment.