How to build a KPI system across departments

Bold statement: most success KPIs and metrics make your team worse

Often when people put these in place they mean well.

But these numbers end up working against the primary goals of the agency.

I’m Nick Avaria, agency owner, and founder of Agency Acquisitions. Every week I share a client story, insights, and tips into scaling your agency faster, in 300 words or less. Every week I drop a new YouTube Video with real stories of scaling agencies to 7 and 8 figures. Watch the latest videos here.

Here’s the problem - there are two ways to do KPIs by role/department

1. KPIs that individuals or departments have full control over, but are not fully aligned with company goals.

2. KPIs that are aligned with company goals that individuals/departments don't have full control over.

Both of these options have their pros and cons.

I can tell you now that I recommend option #2 for smaller agencies. While #1 is standard for larger companies.

Here’s the problem. 

To do option #1 requires really good, very aligned management and leadership teams.

A lot of management and leadership training on an ongoing basis and high levels of trust.

Said differently - high amounts of management sophistication. This is usually something that smaller agencies are light on. 

They mistake good culture for management sophistication. 

They are not the same thing, not even close.

What happens when KPIs are too individualistic is that people will try to maximize their numbers even if it's to the detriment of those around them. Be it their peers, the other departments, or the organization itself.

If you have ever done performance reviews where most people did well or had full departments tell you how well they are doing while the company as a whole is doing mediocre, this is exactly what I mean.

The only way to make more individualistic targets work is to have a baseline condition to them, usually profit %. 

But the problem is that if everyone hits their individual targets but we miss profit goals, thereby not giving people what they believe they deserve, we risk demoralizing them.

Additionally, hitting board team-based goals like profit etc. is made way harder when everyone is just in it for themselves.

You hear a lot of, “that's not my job” or, “that's not my problem.”

Instead we need KPIs that align and create the following wins for 3 stakeholders simultaneously:

• Client

• Company

• And Individuals

I call this triple-net wins.

The best way to do this is to go with option #2 - KPIs that are aligned with company goals that individuals/departments don't have full control over.

Specifically you need to have KPIs and metrics for the client delivery teams that must include:

• A client retention metric and KPI

• A client result metric and KPI

• A productivity metric and KPI

These are the 3 non-negotiable KPI/metric pairs. 

The biggest challenge will be this: people will tell you that they don't have enough control over these to be judged on them.

But winning is a team sport. 

I would rather have this conversation of how we should win or lose as a team, working together.

Then winning as individuals and losing as a team. Because even if individuals win they end up losing anyways.

Want to get the KPIs in place your agency needs to scale to 7 or 8 figures? Book a time with me this week to find out how to get started.

Nick