If you’re growing fast, you might be wondering how to scale your systems, including your metrics, your reporting and your transparency to support that. This is particularly critical as you spread beyond one geographic location.
“Don’t get bogged down in the outputs, the EBITDA, the retention,” says Joe Socolof, COO of Landscape Workshop. “Those are all output metrics, but figure out the behaviors that really matter and manage those.”
Socolof, along with Christianna Denelsbeck Rudder, CFO of Landscape Workshop, will detail the metrics their team watches and how they use data to evaluate performance on the team member, branch and company levels during their session “Growth and Scaling: The Metrics to Watch Out For” on Monday, Nov. 4, at 1:15 p.m. at ELEVATE.
Rudder says the session will cover the characteristics of what makes a good metric, how Landscape Workshop categorizes their metrics and Socolof’s framework for keeping score, tracking outputs and managing good behaviors.
“Hopefully, someone is coming away with ideas of how to implement those metrics or at least what that looks like regardless of size,” Rudder says.
Socolof notes that this session is very transparent about the metrics Landscape Workshop looks at and manages.
“We will be sure to entertain them with some stories of where we have done this wrong,” Rudder says. “We will be very honest and share what to do and what not to do.”
Metrics to Watch
Rudder says the outputs they monitor include revenue growth, profitability and EBITDA, but they’re also drilling further down into the behaviors that drive the business toward those metrics.
“We’re tracking idle time from a GPS perspective, or labor efficiency, because that’s our biggest cost input, so just driving further and further down to what’s impacting those outputs,” Rudder says.
Socolof says that everyone is going to measure labor and efficiency at some level, but a different metric that Landscape Workshop looks at is renewals.
“We have an incredible infrastructure built around our whole renewal system,” Socolof says. “Are we doing them? Are we doing them ahead? How much price increase are we getting? What’s the margins on the profitability of the jobs?”
The inputs they monitor include whether they are doing their equipment maintenance on a regular basis. Socolof says they want to manage their capital equipment and get the full value from it by treating it well.
Rudder says that tracking metrics beyond growth will help companies not just grow but grow with high quality at the same time.
Incentivize the Right Behaviors
Rudder says you need to be careful about what behaviors you are driving by choosing what metrics to monitor. For instance, in the past Landscape Workshop incentivized the team financially for a good Net Promoter Score. This caused employees to only send the survey to customers who would rank the company high.
Similarly, with EBITDA, they realized they were inadvertently incentivizing their GMs not repair equipment because it would hit their income statement and affect EBITDA.
“Be careful about what behaviors you might be indirectly encouraging that may not be good for the business,” Rudder says.
Socolof says there are a lot of times when you can mistakenly incentivize the wrong behaviors. He says typically, the way they catch this is by an anecdote. He will then start asking questions, looking across the system and see if they have incentivized the wrong behavior.
“I’d love if people would always make the right, good decision, even when it’s not in their own best interest to do so, but that’s pretty unrealistic, so we’ve got to get the metrics in that case aligned,” Socolof says.
When a company is missing the mark with their metrics, Socolof says it comes down to one of two things. Either the underlying process is not doing the job or people are not following the process. You have to determine if the process is credible and should be delivering. If so, it becomes a question of a person’s skill/will.
If it is a skill issue, it indicates more training is required. While a will issue means figuring out how to motivate team members to follow the process or if they need to leave the organization and bring in those who will follow the process.
Rudder adds that clarity is critical for making sure your team understands how to impact your metrics.
“Our incentive programs are driven off of retention and profitability, and we try really hard to make sure it’s abundantly clear that everyone understands how those metrics affect their bonus program,” Rudder says. “So sometimes I think when there’s lack of clarity, then the metrics lose a lot of power in terms of why we’re tracking them.”
Achieving Transparency
They will also discuss during the session the systems that allow them to manage the business at scale and what landscaping companies should consider as they invest in their own software and systems as they grow. Socolof says that as your company grows, the metrics you track and the behaviors that drive them don’t change, but your ability to create transparency and see what’s really going on does change.
At some point, you can’t manage everything by brute force due to the scale of your company.
“The basics are there, but we’ve got to get better data and better transparency and better processes too, to actually follow up and track and make sure people are actually having conversations around the data too,” Rudder says.
Some of the systems Landscape Workshop utilizes include Aspire, Azuga and Intact for their accounting.
“The important thing here is systems are great,” Rudder says. “They’re only as valuable as the quality of what you put into them, and then even further, how you package them to your team matters.”
Rudder says that while their teams have transparency in Aspire, you need to create a package of data that is very easy to digest. They present their information in reds, yellows, and greens to help with data visualization.
“I try to take all the systems and get it into an Excel and into a way that the people can touch it, feel it, use it,” Socolof says.
Looking to learn how to scale your systems in line with your growth? Register for ELEVATE and we’ll see you in Charlotte, North Carolina!
