Putting Success Metrics at the Heart of your Operations
An introduction to setting up goals, KPIs and operational drivers for your organization
Our Chief Operating Officer Jonas Rieke recently broke down The DNA of Customer Experience at Personio. He detailed how, as an organization, we have based our operating model on the journey of Personio customers. And like any journey, one can best prepare for success once the destination is known. And our destination is all about outcomes, which signal the realization of value for our customers, and, in turn, for Personio.
What are Success Metrics?
We classify our outcomes in two ways, based on the purpose they are tracked for: success metrics, and OKRs. Success metrics ensure customers realize value, signaling business health for us as a customer-facing organization. For example, a key outcome of our “retain” customer journey is measured in the extent to which we are able to resolve risk to eventually prevent churn. Risk and churn quantify our ability to retain customers and are therefore key north stars for this journey.
But overachieving our north stars requires adaptation to customers, the environment, and innovation. For this we use Objectives and Key Results (OKRs), a goal-setting framework that signals the key areas of focus for individuals and teams. OKRs often leverage the same metrics as success metrics, but their nature differs in that they signal short- to mid-term focus instead of long-term health and continuity.
While both have deep value, today we’ll focus on success metrics: why they’re important, how we define them, how we landed on our own set, and how we embed them in our operations.
Success Metrics Matter
While most teams intuitively know the importance of measuring impact, putting it into action is no easy feat. Not even the best tools, smoothest processes, or most brilliant employees are substitutes for having a clear, measurable and shared definition of success. A lack of this common understanding of goals can lead to units and individuals working under different assumptions of what to prioritize, rooted in different definitions of success.
This shows up in organizations through objectives that read like “Build X processes,” “Push Y product line” or “Release Z documents for customers.” These map to valuable achievements, but they focus on the “how” rather than the “why” and “what”.
From Missions to Success Metrics: Goals, KPIs and Operational Drivers
To identify our success metrics, we used a simple hierarchy that breaks strategy into different metric types: goals, KPIs and operational drivers. Each type serves a purpose, so this exercise was geared toward ensuring that we used each type for the most relevant decisions.
To make this mapping exercise more tangible, let me introduce you to Ross Geller. He is the Head of the Paleontology Department at the NY Museum of Natural Sciences. Ross has kindly volunteered to be an example of how to bring these three layers to life.
Team Mission: As the intersection between your customers’ needs and your company’s wider strategy, this is your starting point. Your team mission shows how your team drives customer value while realizing company strategy. Ross’s team works to achieve the following mission, which in turn maps to the Museum’s larger strategy:
Team Goals: High-level goals that collectively map to the business unit’s mission. A team’s performance across each of their goals directly impacts a component of their mission.
- Characteristics: They usually signal a direction that the team must take to achieve the mission at hand, which is why they often start with verbs.
- Probing questions: What are the components that make the success of this mission? What are the different levers behind making the mission come through?
- Tip: A great starting point is to think of one goal around quantity (number of visits for Ross); one around quality (world-leading experience for Ross) and one around efficiency (hiring the best talent to produce high output for Ross).
Key Performance Indicators and Benchmarks: KPI metrics impact the attainment of each goal. We ask teams to monitor them as their progress ties to its goal’s progress. To know whether we are making progress, it’s important to compare each metric against a benchmark, like historical data (e.g. % trend), targets, industry benchmarks, etc.
- Characteristics: KPIs tend to be relevant in a long-term context, so they are relatively stable. Ideally, they should be comparable against peers and industry. We can rarely influence KPIs directly. Think of “km/hr” as the KPI for speed, or for Ross, “Number of daily visits.” You can take actions that help move the needle, but the metrics themselves are a better show of performance than operations.
- Probing questions: Looking at this goal, what metric will tell me that I succeeded? Is this metric a direct show of performance or am I assuming a correlation between what I am measuring and achieving? What is a reasonable benchmark to compare it against? Is there an industry standard? Is historical data relevant?
- Tip #1: You will be tempted to think of “what can we measure?” We do love feasibility, but be cautious — here is where proxies get tempting! Challenge yourself to think beyond what is immediately available, and find metrics that measure outcomes, even if outputs are easier to track.
- Tip #2: In hyper-growth, year-over-year comparisons can lack context and be deceiving. At Personio we use yearly targets that account for historical data.
Operational Drivers: Now onto the fun part — the part we can influence: operational drivers! They measure the actions that influence KPIs. These metrics are the result of the team’s direct operational decisions, rather than a show of performance. Operational drivers are often designed to influence (or test whether they can influence) the KPIs set for your goal. They represent the dials or levers that can be altered to influence a KPI. Therefore, mapping them out can bring clarity on what drives impact (or not) in an organization.
- Characteristics: Operational drivers allow for higher control span. To change the km/hr number on the dashboard, one operational driver is the pressure applied on the pedal. If the Museum wants to have more daily visits, they may open for longer hours. Since they are more operational, you can think of factors such as: results/FTE, budget or efficiency metrics as the types of parameters that will drive different KPI results.
- Probing questions: What are the levers or assumptions at play that, if changed, will affect a KPI? Are these metrics under your span of control, or are they rather driven by other organizational units?
- Tip: Operational drivers may be owned by stakeholders across your organization, so thinking through their ownership can help discover cross-functional dependencies. For example, in the case of Ross, he is unlikely to have direct control over the amount of online marketing budget. Collaboration with Marketing on a common goal will be key to ensuring these operational drivers move in the desired direction.
From Theory to Practice:
Ultimately we need to balance the benefits of conceptual exercises like this one with their practical applications. In this case, we want to achieve a cohesive focus across CX teams through success metrics, and a governance structure that supports their realization and ownership. Through this exercise we came up with more metrics that we can, at this stage, realistically measure. But this first conceptual piece across the teams helped identify a core set of 18 success metrics that we can evolve over time. Some of the steps we took to outline these could also be of benefit to others searching for their own definition of success:
- Gather information: There are probably different understandings of what each team should strive towards in your organization. For us, we introduced this framework in a workshop with all CX leadership (about 20 participants), where, by introducing Ross’s example, we asked each team to use their missions as starting points and map their goals, KPIs and operational drivers. Feedback was clear: it was not as easy as anticipated! The discussions unmasked different assumptions and flight levels across the teams. This input collection was not only a playground for brainstorming, but it also showed the very different approaches and understandings of what success is and how we measure it across the leadership team, leading to a common baseline to work from.
- Consolidate in a smaller leadership group: Taking the leadership team’s input, we consolidated a set of KPIs and operational drivers mapping to each journey and teams. The focus was that each journey had KPIs outlining quantity, quality, and efficiency metrics.
- Develop reporting based on short, medium and long-term feasibility: Having an “ideal state” in mind, it was time to identify which metrics were available and which needed work. We believe that a stick in the ground is better than nothing at all. So when we cannot measure what we ultimately want to, we use what is available today and build a roadmap to bridge the gap, typically through some OKR iterations.
- Build these metrics into your business review structure: Which decisions do these insights facilitate? Is everyone working from a single source of truth? How often should they be reviewed? Who should be part of the discussion? These questions guide the design of our business review updates. A very lightweight approach we use as a management team is reviewing KPIs across CX on a monthly basis, outlining where we are/are not on track, and if any actions are needed to achieve our business plan.
- Make Success Metrics Visible: It will be hard for your organization to focus on the right metrics if they are not top of mind. We live up to Personio’s value of #transparency by sharing progress across success metrics at least on a monthly basis through a newsletter with the whole organization.
Next, our focus is on having all these figures and insights in one single dashboard to report on them in real time. We will continue to evolve our metrics so they reflect the most customer- and outcome-centric views of success we can. And, of course, we will continue iterating to infinity and beyond!
With the data and insight possibilities available today, it can be easy to get lost in the operational metrics of our day-to-day business. Having outcomes at the end of a long stream of people, projects, and actions can feel like hitting them is the final check rather than a key strategic component. This is why we have chosen to make success metrics the starting point in the CX DNA story. Ultimately, we are defined by our ability to drive customer value and Personio’s strategy, so knowing where we are going is the first piece in building the operating model that gets us there.
