4 Reasons Sharing Performance Metrics Will Accelerate Your Business
By all metrics, I would be labeled a serial entrepreneur, having founded three startups and grown another established business. And like most entrepreneurs, I learned quite a bit from both the successes and failures of each. While I was fortunate to have successful exits from my first startups (ClientBase, now part of Sabre, and optionsXpress, now part of Schwab), I am constantly trying to improve my tried and true business practices.
At my current startup, Reverb.com, an online store for guitars, instruments and musical gear, I’ve discovered a new route to improvement: sharing performance metrics with my teams. It has had a dramatic impact.
Each member of my team has my company's own homegrown performance dashboard on their desktop, providing them with access to all the same information I have whenever they want it. This includes data on real-time, daily, monthly and annual data for orders, transactions, returning clients, new customers, revenue, user retention and daily activity.
It’s not fancy. There are no colorful charts and graphs. It’s just a display of current and historical data shown side by side so we all can see how things are trending.
Performance numbers have always energized me as an entrepreneur. Whether custom-built or hacked together with free online tools and spreadsheets, anyone can build a dashboard and start enjoying the five benefits below:
1. Satisfying employee desires.
Today’s best employees -- the ones smart entrepreneurs want to recruit and retain -- don’t want to only know what job there is to do. They also want to know why the job is important and the impact they can make.
Whether this phenomenon results because of the emerging work habits of the millennial generation or as a result of new technology, entrepreneurs should realize that these employees are full of potential and the only way to make that potential a reality is to give these staffers what they want.
2. Saving time and focus.
I hate reports and unnecessary meetings. They waste time, delay action, create fiefdoms, drain energy and by definition are out of date. The performance dashboard is the anti-report. Information flows constantly and can be distributed equally so decisions can be made in as timely a fashion as possible. Immediately layers of bureaucracy fall away, putting employees at all levels in a position to make meaningful change. We still have meetings, but they focus on acting on the numbers versus unveiling them.
A comprehensive dashboard means that meetings aren’t required to go over the prior week's or month's results. Because key data is available to all staffers when they want it, less of my time is taken up by mundane tasks. This frees up time for me to consider big-picture challenges and opportunities, to mentor and prioritize ideas and goals.
3. Teaching success and learning from failure.
Too many employees today feel like they’re just going through the motions. It’s the entrepreneurs’ job to drive them to strive for more. Employees who can see the immediate impact of their work via dashboards can become more motivated and engaged. It never fails.
An employee who makes Decision X and sees Positive Result Y will continue to perform at a high level. Similarly, a decision with an immediate and obvious negative result will become a valuable learning experience.
4. Energizing the team.
The end-of-year holiday party staged by many companies demonstrates the energizing impact of transparency. These events are a chance for members of a team to not just unwind in a fun environment but also to revel in the prior year’s achievements.
For too many companies, though, that’s the only time all employees get excited about success (though a good number of them won’t remember the numbers the next morning). With a dashboard, celebrations can take place on a daily, weekly and monthly basis -- whenever a new milestone is achieved.
My company's performance dashboard has shown its impact time and time again, but this is not meant as a call for open-book management. Ultimately it’s up to the individual entrepreneur to decide what information to share. But chances are, if there’s a metric that gets the business owner's heart racing or puts his or her brain on overdrive, it will do the same for everyone on the team.