In my last article, I outlined how we use KPIs to manage our daily relationship with our overseas product development partner consisting of programmers, testers, and their Security & Admin team. This post outlines three hacks in KPI format to reduce confusion when managing your not-so-routine relationships and the long-term expectations with your clients, business partners and even your family and friends.
“Question: How much time do we lose in disagreements?
Answer: Too much!”
Time lost dedicated to misunderstandings and resolving unexpected disputes is a major concern to anyone responsible for the efficiency of a business. Carelessness in communication is usually the primary cause for such disputes. In the early years of co-finding TOPP TI, I admit to have drastically underestimated how much time I would need to dedicate to neutralising disputes or mitigating the risk of potential disputes. Coming from 17 years in the corporate world where business procedures are well documented and departments such as Risk, Compliance, Audit, Human Resources and Ethics are paid quite well to ensure company integrity during moments of disagreements, working in and with small businesses posed an enormous learning curve.
As humans, it is in our nature to sometimes let passion override precision resulting in not weighing the impact of our words. This comes in the form of exaggerated statements (e.g. you are ruining this project!) or in some cases, careless ‘he-said, she-said’ references to past events which are not documented well and leave room for interpretation (e.g. you said we could have a 50% commissions on all sales!). In most relationships, confusion of such does not stem from wickedness or greed, nor does it make us bad or vindictive, it just makes us careless and in business, such carelessness has its price tag.
In today’s day and age, technology allows us to do much more than in prior years taking multi-tasking to its extremes and minimising breathing space to stop and reflect in critical moments. In negotiations, our primal brain often pursues us to be on the defence from predators. In doing so, our concentration creates tunnel vision allowing us to see only what will offer us the advantage at the expense of other negotiating parties. As a leader, you have to be aware of this and need to acquire the specific skills required to manage it effectively when you find yourself on one side or in the middle of such disputes.
To bring people out of a state of disagreement, you often need to hold intense discussions and ultimately layout in writing a well-researched explanation referencing historical facts and events which convince all the stakeholders and participants that you are acting on behalf of the group as a whole. During this time, business usually slows down and mental fatigue can start to bring morale to dangerous levels. To say the least, this is the last of the many hats you want to be wearing as the CEO of a small firm looking to navigate your company to its next destination in innovation.
Having clients and partners in multiple geographies with varying cultural differences, these past few years I have noticed that dispute resolution resulting from ‘careless communication’ can be extremely costly and needs to be mitigated properly. Here are 3 key areas where applying metrics will help you optimise the quality of your relationships and minimise time spent lost in confusion.
1. Count the efficiency of your contracts and service level agreements and keep updating them based on lessons learnt
It still amazes me how often smaller companies frivolously underestimate and sometimes even neglect the contract negotiation phase expecting that the ‘gentleman’s agreement’ and a handshake will be sufficient to architect a long-term deal. Early on we were lucky to have brought onboard ex-banking SVP Martin Higgs as one of our founding partners. His experience in legal and corporate administration guided us to quickly build a rich library of service level agreements, sales contracts, and software license agreements which became centrepieces when engaging prospective clients and partners. As we hit bumps in the road, we continuously grew in learning the importance of good contracting and with each lesson learnt, our document archive was enhanced and revised for the next business opportunity.
Knowing that the possibilities of what can go wrong are never-ending and having a robust set of contractual documents available and online for your prospects to review gives credibility to your value proposition and level of maturity. Also, building an archive of such saves you from excessive last-minute legal fees given that your contracts are continuously reviewed and updated internally not to mention the comfort and piece-of-mind you will have knowing that your foundation is already strong giving you more time to spend on the more exciting aspects of your business.
Finally, by including a thorough list of frequently asked questions in your initial presentations to your prospects, you are taking the first step in responsibly setting expectations and will save time down the road by avoiding a disagreement. This also demonstrates that your company is lessons learnt-oriented and that you have the experience to show for it.
Primary KPI: Number of missed contract opportunities. Represents the amount of times you could have avoided confrontation if you had included a specific piece of information in your initial contract/service agreement. (e.g. specification between what constitutes a product and what is a service)
Secondary KPI: Number of missed FAQ opportunities. This KPI represents the number of times you could have avoided a long and drawn out conversation regarding expectations if you had better communicated a specific company policy in the beginning. I found that having a lengthy list of frequently asked questions already prepared will often move forward the negotiation process in a quick manner and allow precise expectations to be put on the table earlier in the game.
Interested in how we communicate contractual expectations to our prospective partners when onboarding? Read our attached partner program & FAQs here: TOPP TI partnership expectations
2. Count the efficiency of your ‘handshakes’
When you can’t count on your contracts for precise role and responsibility definition, there is the ‘commitments report’ (aka, the handshake report). To give credit where credit is due, our Dubai-based client Union Paper Mills introduced us to this report. Together we made some value-add enhancements to successfully integrate this report into their issue management program as well as into our company’s internal managerial reporting package.
Simply stated, the handshake report has a 12-month timeline with a stack bar representing every time a commitment is taken. Directly underneath it you have the same timeline with your stack bars showing everytime a commitment was closed. Using colour codes, your closed commitments are divided into successes and failures.
It would be an understatement to say that this report is effective when wanting to communicate with someone in a non-confrontational manner that they are wasting too much of your time.
We had a sales partner who continuously asked us for excessive amounts of our time to be available for on-site product demos and costly marketing activities. He even requested for us to build product enhancements for his clients who were still ‘sitting on the fence’. All of this under the premise that our efforts would one day convert into product sales. After a year of patience, we finally introduced this report into our bi-weekly status updates where on the top were listed each of his specific requests and on the bottom the ‘cemetery’ (in red) of our lost efforts. In doing so, he immediately felt more accountable when requesting time from us and began weighing his requests more wisely.
Taking this further, on the same page in graph form we included a summary pie chart to show a breakup of total successes and failures, micro-tasks assigned and completed, the total hours dedicated to successful commitments and total hours dedicated to failed projects.
Finally, by adding a second page providing the details of each individual commitment, your collaborators will start to take your time more seriously knowing that you are quite efficient in accounting for it.
Primary KPI: Number of commitments agreed to a number of commitments successfully delivered. Represents the number of times you have made your resources available for someone and what result they delivered leveraging your efforts
Secondary KPI: Number of hours dedicated to commitments by the outcome. The number of hours you have dedicated to successful projects and the number of hours that were lost on ‘handshakes’ that finished in the project cemetery.
Want to know more about our commitment report? see a real example here
Want to know more about how the Union Paper Mills partnered with us to manage their commitments? read our case study here
3. Count and communicate re-occurring issues (aka chronic issues)
Lastly, as a leader, it is your responsibility to identify when a re-occurring situation is hurting your business so that you can find its root cause and eliminate it as quick as possible. Often, the first step in eliminating an issue which is re-occuring is to acknowledge its re-occurance.
When automation is present, it is quite easy to count, measure and communicate how a chronic issue is impacting your business. When managing relationships things can become a bit more tricky requiring tact and soft skills prior to arriving at that ‘eureka’ moment.
A trick I like to use again and again is to include subtle numerical references when reminding those who are working with me of any trends in confusion.
For example:
‘Chander, this is the 2nd time in 2 weeks we have had this disagreement on marketing responsibilities, lets get to the bottom of this.’
‘Francesco, you have arrived late to our meetings 3 times in 1 month. Anything I need to know about?’
By highlighting re-occurrence and putting a number on it, you are transforming the issue on the surface into a symptom and identifying that there is a greater and more important issue to be observed. You are also helping your collaborators become more aware of how their issue impacts you and begin to be more ‘root cause’ oriented
KPI: Number of occurrences of issue. Represents the number of times the issue has been verified and has caused you a personal discomfort
Summing it all up
Coming from a ‘Lean’ background and growing with TOPP TI these past few years, I feel lucky to have been able to truly connect the dots over time as to the real value that a streamlined and well-managed portfolio of KPIs can offer a company by reducing variance and allowing company leaders to be more effective in tactical decision making. In doing so, your company creates more time and creative bandwidth to focus on innovation and growth.
I believe that keeping your portfolio of KPIs streamlined is an ongoing exercise and surely one size does not fit all. Judging from the information online about KPIs, it seems that there are still opportunities to create new methodologies and techniques and a wide market of businesses who are curious to partner with you while doing so.
How do you manage performance? What metrics do you find appropriate and convenient when gauging the efficiency of your business. I would be delighted to know.
