Pick up a book on management, goal setting or key performance indicators, and you will likely read the quote, “What gets measured gets managed.” While management guru Peter Drucker is often credited with saying this first, some people claim he neither said it nor believed it. Not everything we measure truly gets managed, and some things that are managed well are difficult to truly measure.

Nearly every model for setting goals states the importance of making measurable ones. We can see red flags before they become catastrophic by tracking and measuring critical factors for projects, such as percentage complete and composite labor rate. Measurement and management go hand in hand in most aspects of business, projects, safety, estimating, business development and more.

Accounting

Most businesses track accounting metrics year to year to make internal decisions and provide financials to banks and bonding companies. It is easy to look at high-level numbers such as revenue and profit. Still, we can dive deeper and compare percentages and ratios to previous years or industry averages. The most common way of calculating overhead to apply to estimates is to look at the previous year’s total overhead expenses and revenues. Dividing expenses by revenue gives the percentage of overhead expense compared to sales (revenue), which can be used to allocate overhead costs to an estimate based on the project’s bid price (sell price).

Another commonly tracked metric is revenue per hour or per employee, which are calculated similarly. Revenue per hour is the total revenue divided by total hours worked. This could then be multiplied by 2,000, the average number of work hours in a year, to determine the annual revenue per employee. If the number of employees remains steady, a step can be eliminated by dividing the total revenue by the number of employees to calculate revenue per employee.

Safety

Safety can benefit from tracking and measuring data. Measurements such as experience modifier rate (EMR) and incident rate are essential from a risk management perspective. EMR measures the claims history over the past five years. A rating of 1.0 represents the average for the industry compared to other companies of similar size. A higher rate indicates a higher-than-average claims history. A rating of less than 1.0 indicates a lower-than-average risk of costly claims.

The incident rate allows for an apples-to-apples comparison of a company to others in the industry for recordable OSHA incidents.

Estimating

Tracking and measuring data in estimating can also be helpful. Looking at hit rates on projects that were bid on, how many projects were awarded compared to how many were bid? What is the hit rate in dollars won to dollars bid?

These measurements can be dissected in more detail, including job types (commercial, industrial, healthcare, etc.), geography or by the estimator to make more in-depth decisions. Historical data from previous jobs also provides helpful information that can be used to check current bids and confirm a gut check that a bid is in the right ballpark. Ratios such as material to labor or average lengths of conduit per light fixture can be valuable in ensuring it’s a good estimate compared to similar projects.

Employee satisfaction

One area often overlooked is data related to employee satisfaction and engagement. Recently, these numbers have become even more critical with the challenges in finding and hiring good people. While these numbers don’t come from a financial report and require direct input from employees, they can have great value in building a high-performing culture and team atmosphere. Tracking statistics such as turnover and absenteeism per department or the whole company can generate insights on any necessary management adjustments. One of the most valuable is conducting an annual employee engagement survey and comparing the data to previous years. This information can help the organization’s leadership know where strategy adjustments need to occur to ensure everyone is working toward a common goal.

Other measurements and metrics can be calculated and tracked from the financials, bid results and safety logs. Not everyone is a numbers person, so employees can be easily overwhelmed by tracking too much data and may not provide accurate and timely information, leading to less than helpful outputs.

Finding the proper balance of the right amount of data to make informed decisions and track progress is essential. If there isn’t value in the data or you don’t plan to use it for managing the company, don’t spend the time gathering and measuring it. Find what is valuable and useful and develop a plan to measure what matters.