Episode 351: How To Get The Most From Your Team
Performance management plays a vital role in driving growth and scaling operations. It involves setting clear goals, tracking progress, and holding individuals accountable for their performance. However, many business owners struggle with implementing effective performance management strategies and identifying the key performance indicators (KPIs) that align with their strategic goals.
In this edition of #AskAdam, Adam discusses performance-based management and how to improve performance in a business. He emphasizes the importance of setting clear goals and creating a budget to achieve those goals. Adam explains the process of setting Key Performance Indicators (KPIs) and how they should align with the goals of the business.
Show Highlights:
- Setting clear goals and creating a budget are essential for effective performance management in a business.
- Key Performance Indicators (KPIs) should be set based on the budget and aligned with the strategic goals of the business.
- A meeting and reporting structure is important for fostering open communication and accountability within the organization.
- Leadership skills are crucial for building a successful business and maintaining a motivated and high-performing team.
- Performance management does not require being harsh or demanding; it is about creating a culture of communication and accountability.
Links Mentioned:
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Transcript:
Please note this is a verbatim transcription from the original audio and therefore may include some minor grammatical errors.
[00:00:00] Adam Stott: Hey everybody, welcome back to Business Growth Secrets. This is the podcast that helps business owners take their businesses from six figures to seven figures using scaling strategies that get you to the next level. Every single episode, Charlie brings us questions that are performance based questions, strategies for growth and scaling from our network, from our clients, from you.
[00:00:27] So if you have a question that you want to ask, you can put it in the comments, a topic you want to hear about, we will talk to you about it and help you get to that next stage. So without any further ado, Charlie, take it away. What we got today?
[00:00:38] Charlie: So today, uh, the question was generally about performance based management and how they can get better at that and what KPIs they need to look at to, to get better at that.
[00:00:48] So first of all, what are the fundamental components that make up a robust performance management system? Um, and how do they align with the, you know, the strategic goals of the business?
[00:01:00] Adam Stott: Okay. That’s a
[00:01:00] Charlie: big
[00:01:01] Adam Stott: question, right? So we’re going to try and break that one down a little bit. Uh, so, so, so first thing we said, performance based management.
[00:01:07] Yeah. is what they want to talk about. So essentially getting a better performance out of their team. Um, you said really putting strategies in place to allow the growth of the business. So the first thing that the, the management team needs to do, the owners of the business need to do is they need to sit down and they need to set out what does Good look like what does great look like, you know, and what is bad look like?
[00:01:32] So what’s bad? What’s good? What’s great? And now we’ve got three different variations of performance and, and essentially by actually looking at the business and looking at those different tiers of bad, good, great. Now the management seems made decisions on what the business should look like. So that’s a strategic discussion that your management team needs to have.
[00:01:55] The owners of the business needs to have what you then do and what you should then do if you’re running a business. What we’re talking about here is I know this business and other people that have asked the question, you know, great clients of ours. I still got really good business. And they’re looking at scale it which is brilliant.
[00:02:10] This is what we help them do is They really need to start looking at putting a budget in place, knowing these things, uh, knowing these figures. So what a budget is, a budget is when you look at the activities that you are going to do, the money that you are going to spend, and the profit that you are going to derive from, and then you forward that across the course of 12 months.
[00:02:32] So here is all the things that we’re going to look to sell. Here’s all the revenue that we’re going to look to create. Here’s the money we’re looking to spend. We’re going to invest in order to create it. And here is the bottom line. So we’ve got a forward forecast budget for the next 12 months of what we want to achieve.
[00:02:48] Charlie: Well,
[00:02:51] Adam Stott: you’re, you’re forecasting. So you’re saying, Hey, this is what we want to achieve over the course of the next 12 months. And the reason this is important is because this is step two. Step one is we’ve sat down as a management team and said, This would be really bad for the business. This would be good for the business.
[00:03:10] This is great for the business. So what you then want to look at is you then want to between you and the management team of your business, when you bear in mind, you don’t be writing budgets if you haven’t made your first sale, right? And that’s actually where a lot of people go wrong, right? They’re a startup business and I think they’ve got to write a financial forecast and a budget and they haven’t gone out and spoke to anyone, they’ve not done any business and they don’t need to.
[00:03:33] But when you are at the point where you’ve got a team, you’re scaling, you want to scale that business, you’ve got to look forward and you’ve got to be strategic and that’s why you need a budget. So now we’ve got a budget, sorry, step one, we’ve had a conversation. What does bad look like? What does good look like?
[00:03:49] What does great look like? Now we’ve had that conversation, we set the budget. Based off of, let’s say, great, this would be great performance or somewhere between good and great, right, you know, certainly not where bad is and how we would look at that. And then we would start to forecast out this is what I want to do in, in January.
[00:04:10] This is what I want to do in terms of top line sales. Uh, these are the activities that we need to do to create it. This is what we are willing to spend and invest in our marketing, in our team, in our infrastructure, in every different part of the business. And this is the profitability that we want from the business for January.
[00:04:27] And then the same for February, and the same for March. And then you forward it out. Okay, so how does this relate to the original question? Because now we’ve done step two, done step one, we’ve done step two, we’ve got a budget.
[00:04:37] Charlie: Yeah.
[00:04:38] Adam Stott: Now we have, now we can performance manage the business because we have a guiding light of what we want this business to look like.
[00:04:46] But before we have the budget, we can’t really do that. We have nothing to measure it against. Nothing to measure it against. And that’s exactly what happens. Most business owners are very much emotionally led. They go off. Well, I don’t feel like I’m doing very well right now. And you know, I know we need to, and they’re saying to themselves, I know we need to do more and they’re not seeing the results that they want to see.
[00:05:11] And they can’t really see what they want to see out the business. And they keep feeling frustrated. And it’s, it’s not because the team and not bring in a good performance, it’s because the business has not really stepped back and said, Hey, what is, what a good look like? What does great look like planned out?
[00:05:29] This is a plan for great. Now it becomes simple to do step three. So we’ve done step one, we’ve done step two, which is the budget. Now we’re going to do step three and we’re going to look at the budget and we’re going to say in order to make this happen, and if this is the next 12 months of our lives in this business, in order to make this happen, what are the key areas, the key performance indicators, this is where the KPIs come in, is this step that we need to set for the business.
[00:06:03] So you would say, well, you know, if we’re going to do this in January, in February, so we’re going to need some key performance indicators around sales, right? So what we will be looking at is what the KPIs around sales, we’re going to need some KPIs around the marketing. So a key performance indicator is, Hey, We want to do 200, 000 in sales in January.
[00:06:22] In order to do 200, 000 in sales in January, you know, in this particular instance, this is a dog business, right? In this particular instance, you know, we need 800 dogs to come through the doors, right? So If we’re going to do that, you know, we need to make sure the sales team are converting those 800 people.
[00:06:42] We need, we need 1600 leads because our conversion rate is 50%. You can work backwards, like once you’ve got a figure,
[00:06:47] Charlie: you can go, alright, so to get that, we need that. And then to get that, we need that. And then to get that, you need to perform like that. Absolutely.
[00:06:53] Adam Stott: Now, the way to do this well, really well, is to set your KPIs.
[00:06:58] And this is how, exactly how we do it, right, in the businesses that I’ve scaled. is make your KPIs very simple. And if you make your KPIs very simple, you’ve got certain key numbers that everybody’s looking to reach. Everyone’s looking to me. So you’ll have, you know, for example, in, in my business, big business events, one of my businesses, you know, we know that we need to generate 4, 000 leads per month and that is a KPI and we’ve did it.
[00:07:28] We didn’t do it right. And that’s a key indication. That’s a, that’s a KPI that the market manager’s responsibility is to generate that those 4, 000 new inquiries per month and all the activities that we do. are there to to to generate that the market and spend because we know if we generate 4, 000 new inquiries per month then the next KPI goes well how many of those 4, 000 new inquiries attend an event right and then our next KPI is on show up rate so then you have a KPI on show up rate and then you have a KPI on conversion rate and now we’ve got we’re following the funnel the KPIs follow the funnel Funnel through from when you first meet someone on the journey to the full completion of the journey.
[00:08:13] And that’s how the business owner sets the KPIs. So it’s a, it’s a really long answer to a very good question that in order to performance manage a business and in order to performance manage people, we need to know what performance we want, i. e. good, great. Uh, we need to look forward. How we are going to create and we need to budget how we’re going to create that we need to devise the KP eyes.
[00:08:39] And then this is
[00:08:40] Charlie: where
[00:08:40] Adam Stott: the next steps comes in
[00:08:41] Charlie: steps that like, like I said, like in a sequence instead of it just being like one KPI, how are we going to get there? But you split it up into smaller bits. It’s easier for each person in each apartment to get to each bit.
[00:08:51] Adam Stott: Absolutely. So now to do it. And then the final part Is the bit that a lot of some people will do everything that I just said and I mean here And then they drop the ball on the last bit.
[00:09:03] They’ve got to communicate those kpis. So, you know what? Um, Obviously we’re i’m filming now with you, but I’ve got manny and i’ve got aaron here videoing and filming as well with us now Shout out to those guys, you know, making it all go down, so if you’re watching this YouTube video, comment, hi Aaron, hi Manny, maybe we’ll get them to show their face one day, he’s on here as well, uh, they’re super good looking, if you want to see them, let us know, right?
[00:09:28] Yeah. And, um. We have a company wide meeting every Tuesday where we talk about the KPIs of the business. We hold people accountable to the KPIs of the business. And you guys probably don’t even realize that. But what that is, is that’s a continual communication of what is happening throughout the business.
[00:09:48] Because every step I just told you is what we do in this business and the other businesses I run. So, you know, that’s kind of the way we do it, right? And um, What that does is that allows you to hold everybody accountable to the collective goal of the business, which was set by the management team at the beginning.
[00:10:04] Charlie: Yeah. Yeah. So everyone’s involved. Everyone knows what’s going on. They know the processes and it’s not just left up to the people at the top to, to try and hit those because if they don’t know about the targets, there’s less things to strive for. There’s less. Yeah, they just don’t know as much. Everyone wants direction, right?
[00:10:17] And it don’t
[00:10:18] Adam Stott: matter what part you play in the business, you want to know your man. Nobody wants to come to, to work and not have anything to shoot for or aim for. They want, everyone that works for you wants to know what does good look like, what does great look like. They want to do this. Very, in my experience of hiring thousands and thousands and thousands and thousands of people.
[00:10:39] Charlie: Yeah.
[00:10:40] Adam Stott: Out of the thousands and thousands of people I’ve hired, very, very few. Very few have been completely disinterested in doing a good job. Everyone wants to do well. Everyone wants to, everyone wants to, and some people are maniac, want to do well. I want to contribute, you know, I want to like they’re driven and other people just want to feel good about their contribution and it’s not crazy and they’re putting less effort.
[00:11:07] Fine. But what I’m talking about is like it’s 1 percent that truly are like, I could not care less, you know, and those 1 percent don’t last very long, right, as you know, right, in a good business. And so people need to know what they’re aiming for. And, and, and then it’s, I don’t feel like this is, this is the thing I think that’s took me.
[00:11:30] That took me certainly I think two businesses to understand Um, you know now having run many businesses, but probably two Is the performance management? You don’t need to be a dick. Yeah to do performance management. Nah And I think a lot of people think you, a lot of people think, well, I need to, I don’t want to tell
[00:11:51] Charlie: my staff how to be exactly, but it’s not, it’s not about that.
[00:11:54] I
[00:11:55] Adam Stott: don’t think you need to be demanding, harsh, critical, horrible, um, to the people to work for you. I think that’s absolutely the opposite. I think definitely. I think like I felt like in my, the first business I ever ran when I first got people and people working for me, I felt like, you know, it’s quite immature is that I had to drive every part of the result consistently.
[00:12:21] And if I did not give the energy to the team, the team wouldn’t bring the energy, but actually I think it has the opposite effect on a business. I think what happens when you’re a, raving lunatic, and you’re just trying to energize everyone all the time. What it actually does to the business is it it suppresses people.
[00:12:38] It doesn’t allow them to think for themselves. It doesn’t allow them to flourish. And when I talk about performance management, I’m not talking about beating people with a stick, but
[00:12:49] Charlie: I’m
[00:12:49] Adam Stott: talking about creating a commercial culture and a culture of communication. where everybody knows what good looks like and everybody wants to go for good and great.
[00:12:59] Yeah, yeah, yeah. Nobody wants to go for bad. Instead of forcing them. Yeah, instead of like, beating them with a stick to get there. I want them to go, Oh, okay, right, I get it. That’s, that’s, that’s like. And I’d love
[00:13:08] Charlie: to play my part in
[00:13:09] Adam Stott: getting to that. Exactly. Yeah, yeah, yeah. And that for me is, is, is that certainly the, the better way to, to, to run, grow and manage the business.
[00:13:18] Charlie: Well, no, you, you answered that, that perfectly to be fair. And it, it makes a lot of sense that, yeah, instead of trying to, Have this one KPI that everyone sort of sorts of follows and doesn’t know how to get to but it’s like well we need this to get that and that to get that and that to get that when you’re laying down the bottom of the funnel when it comes down to like the actual performance of people it’s a lot clearer to understand all right well I’ve got to do this and then that will like I mean it’s a lot easier to understand.
[00:13:39] Absolutely. Well, look, I hope you know, is that yeah, there was there was one more. But you sort of, you sort of, yeah, well, let’s see if we can give a bit of clarity before we come out of this. Um, it was more about, so yeah, about actually once you got the KPIs and communicating it with the, uh, with the employees, what do you think are like some effective strategies that you, you spoken a little bit, but Some effective strategies for fostering that open communication between your managers and employees.
[00:14:02] What’s the sort of best ways that you think about, um, yeah, creating that environment,
[00:14:07] Adam Stott: correct? What? Creating the, creating a good environment, creating a culture. I think, I think what happens is, is the way that the business owner is feeds down into The team and everyone, right? And I, and I’ve been both, I’ve been multiple types of business owners in my career.
[00:14:29] I’ve been the raving lunatic. Yeah. Where I just have, you know, because you know, I’ve been the energizer where I come in and energize. Um, what I prefer to be now is, is I prefer to build really good management teams and let the, and, and let the management teams deal with really good area. of the job and I prefer to have a good open communication with everyone that works for me.
[00:14:57] Anybody that works for me can come talk to me. They shouldn’t, no, I would hope that no one’s afraid to come talk to me. And, um, and I will go around and I will talk to them and have conversations. Every single person that works in the business, but I will manage the management team. And the managing of the management team is then up to them.
[00:15:16] So they’re managed the rest of the team and create the open communication. So have it, have it. Having said that, I think every business needs a meeting structure. I think every business needs a good meeting structure and every business needs a good reporting structure. And by the way, when you’re scaling the business, like not.
[00:15:33] You don’t need a reporting structure and a meeting structure when you, when you’re in your first 50, worth of revenue, right? It’s when you’ve got
[00:15:41] Charlie: other people working for you and there’s no other and you’re building.
[00:15:44] Adam Stott: So what, one of the reasons you want the reporting structure is you want people to own and take responsibility for those KPIs.
[00:15:50] So by getting them to report on the performance of those KPIs, they are then holding the responsibility for that and acknowledging. that they’re responsible for it. The meeting structure is just to keep the whole team together. I like to have a company meeting, bring everyone in, keep the whole team together, keep everybody know where we’re going.
[00:16:09] And the problem is, is some business owners might feel like, you know, I’ve been there. Oh, I don’t know if my team want to have a meeting and they don’t want to get together and my team are not interested. And the truth is, if that is what the business owner is saying. To themselves. And that is what they’re seeing in their business.
[00:16:28] Well, it’s the owner’s responsibility. It’s the business owner’s responsibility that they’ve allowed the culture to get that way. And in order, and they need to step up, uh, they need to feel differently about it and say, you know what, even if they don’t want to come to the meeting,
[00:16:44] Charlie: they
[00:16:44] Adam Stott: need to come to the meeting because this is the business.
[00:16:46] This is what we’re creating. And then he starts saying to themselves, I’m going to make those meetings fun and entertaining and engaging. What can I do to make that happen? And then they will start seeing a different culture. So what you got to do is almost stop the rock and just switch up the culture. I think a lot of businesses move into a rotting culture and I think they’ve got to switch up.
[00:17:05] Sometimes it takes new voices to do that. Yeah. Sometimes the clients we coach, including the person that’s asked this question, Yeah. Um, great people, but not, I’m not talking about the person that’s asked this question individually. When I look at a collective, I see a lot of business owners that are great at what they do, but they need more work on their leadership.
[00:17:27] Charlie: Yeah. And people skills. Yeah, exactly. And
[00:17:28] Adam Stott: leadership and communication. And, and, and a lot of people don’t realize that leadership is, is really critically important within the business. And it’s something that I’ve had to learn over the years. But if you become a good lead, You make more money because your team stays with you.
[00:17:44] Yeah, your team performs better. People want to work less stress. You have to deal with people leaving. It’s like, yeah, yeah. So you got to work on those leadership skills and you got to, you got to put the effort into to build those leadership skills in order to build a better business. Maybe that’s
[00:17:58] Charlie: the next episode.
[00:17:58] How to become a leader. Leadership skills in business. Maybe it is. Tell us in the comments if you
[00:18:04] Adam Stott: want that topic. If you’re looking to scale your business and you feel which Leadership is, is the route for you. I want to say a big thank you for watching the Business Growth Secrets podcast or listening, whether you’re seeing us in person on YouTube or you’re listening on Apple, Spotify, big thank you to you.
[00:18:18] And of course, if you get a moment to go and share this episode with somebody that you feel could get value from scaling their business and leave us a comment. about the sort of topics that you want to be hearing. And we look forward to seeing you on the next episode of the business growth secrets.