The development of a comprehensive metrics strategy is key to monitoring and improving the health of a creative group. Yet few in-house groups have taken the step to identify the key performance indicators (KPIs) that really matter to them and their stakeholders. Even if they have, they often inconsistently develop and review those metrics. Your organization will likely have a unique set of goals, problems and improvement opportunities that need to be measured, but in order to get a full view of the health of the organization it is important to ensure you are looking at all areas of your business.
A comprehensive metrics strategy will likely encompass metrics from four main areas:
- Financial health
- Organizational health
- Products and services
- Processes
Financial metrics are all about the money. This is typically the first area where metrics are developed, and they are often supplied to the creative group by finance. Appropriate financial metrics are dependent upon your financial model. If you are a profit center, like a typical external agency, your focus will likely be on metrics like gross and net profit and cash flow. If you are managed as a cost center, like most in-house groups, your focus will likely be on managing the cost of the department.
Typical metrics from the financial area are budgeted expenses vs actual expenses, vendor and contractor spend, direct cost of FTE labor and overhead expenses. Cost avoidance or client's savings metrics can also be important to track the value you add to the organization. If you're not doing the work, it is likely an external agency would be at a significantly higher cost.
Organizational metrics focus on your greatest and most effective assets...your people. Your people can help you build a stronger, better, faster, happier organization. Too many people forget the importance of these metrics. If you have a very dissatisfied workforce your turnover will be high which increases costs to attain and train new talent. It may also decrease productivity and increase the error rate. The only way to do more with less is to increase the capacity of our workforce to produce more with higher quality. The best way to improve productivity is to improve the worker's skill set and their tools.
Typical metrics from the organizational area could include employee satisfaction, attrition rate, and investments in equipment and training. Employee satisfaction is pretty straightforward. The more satisfied your workforce is with their situation, the organization, and the environment, the harder they will work. The more loyal they will be. And the stronger your organization will become. The attrition rate is a quantitative indicator of employee satisfaction and/or poor hiring practices. People will leave if they are not satisfied with their jobs. This is expensive to an organization as talent acquisition and investments in training are expensive and turnover is disruptive to the production process.
Product metrics focus on the client view of the organization. Pleasing customers is the foundation for long-term success. This area focuses our attention on usage and delivery of our product. It measures our effectiveness. If you are not tracking projects, time and process you may not be able to easily move past customer satisfaction until these systems are developed. The client satisfaction survey can begin the discussion on the need for many of our metrics.
Typical metrics from the product and service area are client satisfaction, product mix, job volume and resource usage ("billable" hours or dollars). Client satisfaction is pretty straightforward. The more satisfied your client, the more business they will give you and the more they will tell others. It is also important to track changes in product mix. This can give you critical feedback to guide service changes and investments (in technology, training and hiring). Just consider the shift from print to digital. While you could use volume to track usage, this may not be an accurate reflection of demand or output due to varying project complexity. A better way to track usage is to use resource usage in hours or dollars.
Process metrics are all about the measuring the process. If our processes are repeatable they can be measured. This is typically the last area where groups develop metrics. The collections of these metrics can be difficult and often accompany the implementation of workflow software. They usually measure some aspect of efficiency like work distribution or productivity or measures of waste like errors and revisions or the speed of some part of the process.
Typical metrics seen in this area are utilization, project duration or cycle time, error rate and on-time delivery. Utilization is a key metric. It measure work distribution and gives you an idea of how productive your staff has been. It measures value added time or time spent working on project related work. 85% is a good goal for this metric; our research indicates most in-house teams goal between 75-85%. Speed of delivery is also critical especially to the client. This is often a big client complaint and needs to be monitored. Errors and rounds of revisions are pure waste. It is important to elevate these to key metrics so you can explore why and minimize them. On-time delivery is also an important client concern.
When developing a metrics strategy it is important to consider KPIs from all areas of your organization or you run the risk of not monitoring those things that are key to the success of your group. Once you have developed a comprehensive metrics strategy you have taken an important step in creating a culture of continuous improvement, because you have created a mechanism to objectively measure your performance.