Good agencies measure performance — of their projects, their business, and their employees.
On this episode of the Agency Leadership Podcast, Chip Griffin and Gini Dietrich examine why employee goals matter, as well as how to set them appropriately.
- Chip, on the importance of good manager judgement: “Employee reviews are not an algorithm…. [you] shouldn’t have a fixed formula that you use because there’s all sorts of times where someone may technically reach their objectives, but they didn’t really get the spirit of it.”
- Gini, on applying KPI reviews to compensation: “There is some human piece to it. It’s not just an algorithm that helps you decide who’s going to get a raise and a promotion.”
- Chip, on unintended consequences of quantitative goals: “If you’re managing towards [a specific] number, and that’s the only way you’re looking at it, employees have a tendency to try to hit those numbers any way they can.”
- Gini, on creating custom KPI’s for team members: “One size does not fit all fit all. But it’s something you should be thinking about. And there’s probably should be at least three if not four different areas that you’re considering, as you think about KPIs and metrics for your, for your team.”
The following is a lightly-edited computer-generated transcript. Please listen to the audio to confirm accuracy.
CHIP: Hello, and welcome to another episode of the Agency Leadership Podcast. I’m Chip Griffin,
GINI: and I’m Gini Dietrich.
CHIP: Gini, how are we doing? What, how are our metrics looking these days? are we are we hitting our KPIs? What should we be doing different?
GINI: We really should have set KPIs for ourselves. But we did not at the beginning of this.So…
CHIP: We set an important KPI, to have fun.
GINI: And we are having fun.
CHIP: We are.
GINI: I guess we could look at number of downloads, number of reviews. But that’s that’s pretty… I don’t feel like that’s very quantitative either. So it’s an interesting topic, that’s for sure.
CHIP: Well, the problem with podcasts is that the the downloads typically will increase over time, almost no matter what you do, because people subscribe to them. They may not actually listen, though, and it’s very difficult to get accurate listenership data from a lot of services. So any case, I’m just gonna say we’re doing fantastic, Gini, you are a great co host.
GINI: You’re a great co host. Look at that.
CHIP: Wow. You know, but that it’s a good segue into talking about our actual topic today, which is indeed KPIs but not of this show. And instead of agency employees, because everybody needs to evaluate their employees, figure out what’s working, what isn’t, who’s working and who isn’t. And so that was a question that you put to the Spin Sucks Community recently.
GINI: Yes, I asked what are the metrics you use to measure employees work and effectiveness and ultimately decide if they’ll get a raise and/or promotion, it was pretty interesting to see the wide range of responses, for the most part, people didn’t give metrics. They talked about, you know, things that they expected employees to do, or to say, or how they, how they were to act in order to get a promotion or a raise, but they didn’t use actual hard numbers, to say, this is what we expect. And this is what you get when we when you achieve it.
CHIP: Right. And I think and this is something that I think I’ve referenced before on the show, I am not a big fan of tying in a one to one way compensation to KPIs. I think that it’s part of the overall equation, and I think you need to be evaluating it, but I don’t believe in Okay, you know, we said you have to do five of these things, you did five of those things. So therefore, you get a bonus or a raise or whatever.
GINI: It depends on how the business is doing too, like you, you could very well reach all of your individual goals and the business isn’t, hasn’t reached it. So I think you’re right, I think there’s three or four different things that have to come into how you measure effectiveness of each individual colleague.
CHIP: Right. And so since we’ve previously discussed compensation a bit, let’s let’s focus on how we get the most out of our employees, which granted, that was not the direction that the community took the conversation. But I think it’s the way that makes sense to go from here. Because ultimately, as an agency, what you need to do is you need to make sure that you have employees who are performing, they’re delivering results for clients, they’re helping to grow the top and bottom line at the agency, whatever it is that your objectives are as a business. And so that’s something that you can and should manage towards. And KPIs are an important piece of that.
GINI: Yeah, and so one of the things that we do is at the beginning of every year, I guess, at the end of every year, because it goes towards the beginning, I ask each team to come to me with their plan. And of course, as part of that plan, there are some metrics in there that the team has to accomplish. And we start every we start from revenue, and then we go on down. And, you know, for the content team, it might be things like, number of engaged subscribers, number of engaged community members, and increase in those kinds of things. You know, that kind of stuff. But then as you go on, go to the enrollment team, which is our sales team, they’re responsible for in that very responsible for revenue. So it depends on where you are in the organization, and what kinds of things we’re trying to accomplish throughout the year. as to where your KPIs lie, so to speak.
CHIP: Yeah, it does, as you’ve sort of outlined there, it is important to start with the agency itself, what is your business trying to achieve? Because if you’re if you’re not driving towards one goal as a team, and instead you’re just every team members doing their own set of goals, that you’re never going to achieve all that you could. And frankly, a lot of this starts with agency owners themselves figuring out what the heck is it that they want to achieve? What is their ambition? Something I wrote about in my AIM-GET Framework, but you need to be thinking about those things. Because if you don’t, you won’t be able to drive down to the individuals to make it all work in harmony together.
GINI: Yeah, and, you know, I mean, when you’re with it, when you have a small group of people, it’s significantly easier than it is with a larger group of people, of course, but, you know, I mean, I could tell you, right now who on my team is accomplishing goals and who isn’t. But we, we definitely start with, what does the agency wants to do in the following year? What are the KPIs for the agency? What do we have to hit revenue wise? What does that look like from a profit standpoint? And then what are you as an individual going to do to help us achieve that?
CHIP: Right. And in an ideal situation, what you want to do is you want to make sure that everybody in the agency knows what those business KPIs are, what the team KPIs are, and then each of their individual ones should somehow tie back to one of those. So, you know, and they may have other things that they need to work on for general performance, but their big picture KPIs, if they’re tying into specific elements of the overall business goal, you’ll have a much higher success rate, at least in my experience.
GINI: Absolutely. You know, one of the things that Shane Carpenter posted was, so how do you measure the difference between employees like, employee number one, meets their deliverables and employee number two meets their deliverables but goes above and beyond by doing some additional work? How do you measure those two employees against each other in regards to raise? Are you only measuring against deliverables? are you adding peer and even client feedback into that process?
CHIP: Well, and this is where I believe that employee reviews are not an algorithm. This is not, it shouldn’t have a fixed formula that you use, because there’s all sorts of times where someone may technically reach their objectives. But they didn’t really get the spirit of it. And we’ve all been there. I mean, some of us have have gotten lucky, you know, we’ve had clients where we’ve delivered results for them, it wasn’t necessarily the way we were trying to achieve it. Sure, okay. Maybe we mark it as, you know, we’ve checked that box, but we wouldn’t necessarily mark as a success. And we’d say, Okay, next time, we need to do this differently, even though we lucked out, and it worked this time. So you really need to use KPIs as guideposts as road markers. But at the same time, you actually need to use some common sense, some good human judgment, that thing sort of thing along the way.
GINI: So if you were to advise an agency owner, what would you say some of those KPIs might look like?
CHIP: So, you know, I think that the first thing that you need to do is take a look and figure out, okay, over the course of the next year, because I think doing KPIs on an annual basis is what makes most sense – you need to check in on them more frequently and as we’ve talked about before you, you need to be having regular conversations with your direct reports so that they know where they stand. But you need to say, Okay, if I look ahead, 12 months from now, what does success look like? How will I know that those 12 months have been good for me and good for the business? And so typically, you know, what I would want to look at is, I would want to look at things where their measures of specific success, say that say it’s about account rep, you know, specific measures of success related to their clients. So maybe it’s, maybe you do client surveys, for example. And so what’s the feedback that you’re getting from them. You know, some people in a more senior level may have revenue targets. And that’s perfectly acceptable and good to put into KPIs. Some, if they’re more operationally focused, you may want to put in target profit margins for projects and things like that, you know, so to try to think of things and the more that you can quantify it, the better although you do want to be careful, because as we’ve talked about, once you start bringing specific numbers into the mix, people will manage to those specific numbers, for better or for worse.
GINI: Right. We used to hear at the big agency we had the billable hour targets, and boy, you can bet we managed to those numbers.
CHIP: Absolutely, I mean, when I was when I was a junior account executive in my very first agency, 25 years ago, long time ago, we had to do timesheets, as many do. And and we had specific targets that we were supposed to be hitting as far as maximum number of hours working on certain projects to ensure profitability, which is a great thing. However, we were on the front line, we were taking the beating from the clients. And so we said, You know what, we’re going to do whatever it takes to get this job done. And we’ll just fudge our timesheets a little bit. And so, you know, if you’re managing towards that number, and that’s the only way you’re looking at it, employees have a tendency to try to hit those numbers any way they can. And it’s, that doesn’t mean bad, it doesn’t mean that they’re horrible, unethical people, it’s just human nature. And so you want to be thinking about that when you’re putting these numbers into place. And when you’re judging them after the fact.
GINI: Well, and I think it goes to, you know, when I, so I left the big agency, and I went to work for an ad agency to build their PR department. And I’ll never forget them saying, We don’t charge clients for meals, either for our time or for the actual expense of the meal. Because we’ve we that’s something we like to give back. And I remember the time thinking, what, because that’s not how I grew up. That’s not what we were taught. And so these I mean, I think they were right in the long run, because otherwise, you’re charging clients for every little tiny bit of time. Even if you’re just thinking about them, as you’re walking the dog, you were you were billing those 15 minutes in 15 minute increments, and just to meet your numbers so that you could meet your number. So I think there is a way to sort of mitigate some of that, while also servicing clients and being able to be profitable as an agency.
CHIP: And speaking as someone who’s been on both the agency and client side of that, I there’s nothing that pisses off clients more than to have to pay for meals, particularly the time of meals between the agencies and clients. So just I mean, don’t do it, cost of doing business. Yes, record that time, but record it internally, as you know, business development client relationship time, whatever bucket you have never ever, ever charge that back, Please, I’m begging you. If you take nothing else from this podcast, do that.
GINI: Do that. And Katie Robair had an interesting, she gave some interesting numbers, which I thought were really good. So depending on level of employee, of course, this varies, but they would have like, get number at certain number of certificates or attend a certain number of conferences and webinars for professional development, but also do a certain number of lunch and learns, so that you could take what you learned and transfer it to the agency. I liked some of it, you know, showing up to meetings on time prepared, showing up to work on time. So it was around things that centered mastering the job and the responsibilities that you currently had.
CHIP: Can I just say if showing up as one of the employees KPIs, please just fire them. Please move on.
GINI: I’m sure you’ve had employees like that, I told this story in the community. But I had an intern, probably one of the best writers I’ve ever worked with ever, ever. And to this day, I’m sad that it ended on a bad note because he was so talented. But he’d been with us for a month, we paid interns $15 an hour, we never asked them to work for free, we paid them $15 an hour, we provided lunch every day that they worked. And we gave them an EL train pass so that they can come get to and from work on time. He came to me after a month. And he said, I really think I deserve a raise. And by the way, the internship was 90 days. And after 90 days, we would evaluate and determine whether or not they were going to be hired full time. So there’s no raise in there. But he came to me and he said, I really think I deserve a raise. And now I was prepared for him to showcase the phenomenal work that he done in the month that he’d been there. And instead he said, I’m in such severe credit card debt, that I can’t pay my credit card bills or make my rent on what you’re paying me. And I was like, that’s not my problem. So right, he quit on the spot. And I mean to this day, it makes me sad because he was so talent or is so talented. But that’s not how you ask for a raise ever. Because that’s not the business business’ fault. That’s not their – That’s not the problem. If you can showcase the work that you’re doing, and how that’s affecting the growth of the business, then by all means, but don’t make your credit card debt and not being able to make your rent a month after you start the problem. You negotiate that up front.
CHIP: No matter what your rationale is the whole notion of requesting a raise after 30 days… Maybe I’m too old fashioned and I’m not hip enough to the millennial way of thinking but wow, that’s just…
GINI: Yes, I was like, wow, um, I really was prepared for him to showcase because he had done some phenomenal work already, in that in that short 30 days, I was prepared to even offer him a full time job sooner than the 90 days. But the way he handled that, and then he was so angry with me because I said no, that he quit on the spot.
CHIP: Well, you know, as we as we’re, as we’re thinking about KPIs and these things, one of the challenges I think a lot of agency owners have is that they read Business Management books. And there’s a lot of good things in Business Management books, but there’s a lot of stuff in there, you have to be really careful about. First of all, you’ve got some of the silly stuff, like, you know, probably we shouldn’t even be saying KPIs today, we should be saying OKRs, because that’s the, that’s the hip new way of talking about them, which is my favorite. You know, I mean, objectives and key results, do you mean KPIs, we had to have a whole book basically explaining this new way, this new way of thinking that Google came up with, it’s not a new way of thinking, folks, it’s just KPIs in a different disguise. And with a lot of extra words around it. And most business management books are basically magazine articles run amok. But one of the particular examples of this came up in the discussion, and that is, it’s sort of a spin off of the old Jack Welch. What you know, whether it’s, you know, 10, or 15% of your employee base needs to be recycled on an annual basis, and I forget the actual numbers, numbers don’t matter here, it’s just the concept that you have that lower performing tier that just needs to be moved on. Other people have this bell curve notion, which is what was discussed in the Spin Sucks Community where basically, you’ve got, you know, top 10%, bottom 10%. And then you kind of tier them in the middle, and you have specific quotas that managers need need to hit in order to put folks into those buckets, let me just say, bad idea. Very, very bad. I think it’s a bad idea in any business, although, you know, I can’t really speak to Fortune 500s. I’ve never worked in a in a company that large, maybe it does work there who knows, it really doesn’t work in the agency environment where you’re talking, you know, 50, 100, 150 people tops, in most cases, and usually a lot less than that, if you start trying to use those buckets, you’re going to make some horrendous management decisions.
GINI: Yeah, and I thought it was pretty interesting, because he said, you know, if you’re in a small group that was full of high performers, it’s really hard, because even if everyone’s crushing it, the managers still have to fill the slots of 10% crushing it, 80% not, or 80%, sort of in the middle and 10% not, they still had to fill those slots. So even if you were really high performing, your manager had to put you in one of those slots. So really, only one of you might be in that top 10%. And even if you’re crushing it, you might end up in the bottom 10%, just because they had to fill those slots. And that means you could be terminated. So it doesn’t, it certainly works if somebody’s not performing. But when you have a team of really high performing individuals, it’s not a good model to use at all.
CHIP: And look, I mean, almost every team is going to even if you’ve got a team of great performers, you’re still going to have some that you know are a little bit better, and some that are a little bit worse. And that’s fine. But that doesn’t mean you need to weed them out and come down hard on the people who are in that that lower 10% of that, you know, magic number. So again, bring in that human judgment to the equation, and you’ll start making smarter decisions.
GINI: Well, and I really like what Katie had to say about this. She said, you know, if someone’s crushing their deliverables week after week, they’re constantly involved in drama, gossip, and complaining about pay and fairness, that that folds into it as well. So there is some human piece to it. It’s not just an algorithm that helps you decide who’s going to get a raise and a promotion.
CHIP: Yeah, I mean, the intangibles are really important. I once had a very talented developer who worked for me, he was technically very proficient, achieved great code and things like that. But I mean, nobody could could deal with him because he was just so abrasive. He was so unpleasant to be around, that we had to move on from that particular hire pretty quickly. And, and if you did it just based on Okay, generated, you know, number of lines of bug free code or you know, whatever it is you want to use, you’d say, okay, that’s great, let’s, let’s keep them. But when you step back, and you’re like, Well, wait a minute, you know, he’s cursing at employees in meetings, he’s, you know, banging his fist on the table, he won’t be helpful to his colleagues. Okay. They were not in the KPIs initially. But I can tell you, it you know, if it walks like a duck and quacks like a duck, you know, we gotta eat the duck for dinner.
GINI: I hope PETA doesn’t come after us for that.
CHIP: You know, I’ve said so many things. I used to have a food and wine publication, Gini. So I’m pretty sure that my post on foie gras would have set off PETA already. In any case. So the intangibles are important. Yeah, I think the other thing that’s important is, you know, when you’re talking about actual numbers, and this is whether it’s KPIs for the employees or for the business, you need to have reasonably achievable ones as well as some stretch ones. Because if you if you only I’ve seen the mistake where people only put their stretch numbers in, and then people feel like, Oh, my God, I’m, you know, we just we keep falling short, you know, we’re not, we’re not doing this. On the other hand, if you just put in the layup numbers, then you’re going to get a lower level of performance, because people will start to rest on their laurels. Once they say, Oh, you know, it’s March and I’m already three quarters of the way to this particular KPI. I don’t need to worry about the rest of the year. It’s not like they’re going to shut down completely. But if you’ve got a stretch goal to go beyond that, that will help them continue to push themselves, even once they’ve had that initial layer of success.
GINI: Yeah. And I think that’s exactly right. Because then you do push them to stretch and they’re not just meeting expectations.
CHIP: Right. And that’s, you know, that’s the popular thing now on kids’ report cards: meets expectations. What the heck does that mean?
GINI: What does that mean, right?
CHIP: You know, I miss the old days, Gini. And again, I feel like an old codger now, but you know, what, what happened to ABC and D?
GINI: Right, I agree, Yeah.
CHIP: And why do we have to have meets expectations, exceeds expectations, but really? Come on, and report cards, you know, now sometimes come out once a year. Really? Really, really? Is it that difficult? But, yeah, I’ll save that rant for another day, I guess.
GINI: Yes. I totally agree with you. Then we can talk about participation trophies, too.
CHIP: Oh, yes. Those? Those are always fun. In any case, anything else to add on KPIs?
GINI: I mean, I think it’s it’s an interesting topic. Definitely. One size does not fit all fit all. But it’s something you should be thinking about. And there’s probably should be at least three if not four different areas that you’re considering, as you think about KPIs and metrics for your, for your team.
CHIP: Yeah, I think it’s important that you you have, you know, one of the things is to find the right number to have and there’s no single right number, I would say that, you know, you don’t want to have someone have, you know, 15 or 20 KPIs because that’s too muddy. But if you only have two or three, you know, that may be too few also. So you need to find the right mix. And again, if you’re tying them back to the business KPIs that will help you figure out what the right number is for your agency.
GINI: And we tend to not do – we do between three and five. We don’t do more than five.
CHIP: Yeah, and that, I would say, That’s generally the happy area, although it depends on you know, how granular you get with some of the things and what’s your you know, what your overall objectives are. So, you know, use it as a guidepost like everything else, but use a little bit of common sense in the process as well.
GINI: Yes, indeed.
CHIP: And I guess we’ll use a little bit of common sense and bring this episode to a close before we start engaging in more circular conversation. One of our KPIs, at least should be to make sure that you the listener are getting real value out of your 20 to 25 minutes of listening to this show each week. So with that, I’m Chip Griffin
GINI: and I’m Gini Dietrich
CHIP: And it depends.