Agency Operations Measurements are the starting point for managing operational efficiency. Have you ever found that after months and months of hard work in your agency that there’s not enough to show for it? The first place to go looking is in your operations. Things have to be organised so that you can tell by measuring in real-time, that the right amounts of profits are being generated.
Agencies have a lot of moving parts with almost every operational step being human driven. In such situations, the principle of entropy usually prevails. Entropy is a strong tendency for things to go from a state of order to disorder. An important yet simple way to keep things ordered is to establish a set of operations measurements and keep measuring, just like football.
In this way you can quickly see how things are going and when things need your attention. Measurements form the basis for all KPI’s, and KPI’s are what you need to ensure that the agency is on track to achieve its objectives. Take your car for instance, and imagine how hard it would be to cover any appreciable distance without instruments.
“Ah” you say, but I’m organised in that area. I use Xero or QuickBooks or whatever. Don’t think that your accounting data is what measuring is all about. Accounting data is important, but what I want to focus on is real-world operation measurements that give you a readout of what is going on right now in your agency.
Generally speaking, these types of measurements are far more important and powerful in terms of the impact you can make on your business than what you will glean from your accounting data at the end of the month when it is all finalised. As an agency owner, you need to have your finger on the pulse of what’s going on so that you can take timely action if necessary to rapidly influence events.
If we use the car analogy again, accounting data is like driving using only your rear view mirror to guide you forward.
There are six measurement domains in an agency. The measurements other than financial ones will have a significant influence on how you operate the business and this will ultimately impact the financial results. All of them are important, but some of them are more urgent than others. In this video, I’m going to focus on operations. The next video will be client acquisition, so keep a look out for it, with several others to follow.
Operations are the activities involved in the day-to-day functions of the business from which profits are directly derived. As you know, your profits are going to depend on your ability to deliver on time and on budget. This is not always easy to do for a wide variety of reasons, but it is easy to achieve on-time delivery if your focus is to get the work done in or under budget. The key operations measurement here is task completion time.
From this one measurement, we can work out task cost, and summing all task times gives us project time, and project time gives us project cost. With task and project time, we can make easy comparisons with quoted times and get all the information we need at a project level as well.
From one simple measurement…
So you can see from just one measurement we have a basis for managing our operations. With a little bit of massaging we can calculate the following KPI’s:
- Percentage on-time completion of projects
- Percentage of projects that overrun
- Percentage of overtime hours
- Overall team utilisation and operational efficiency.
These KPI’s are invaluable as your business scales and your team grows.
So with very simple measurements we have opened up a treasure trove of valuable data useful for bench-marking, budgeting, staffing, capacity planning and client acquisition planning.
With this information you can also quite easily see the relative productivity of your operational staff on a quantitative basis. This is invaluable when it comes to performance reviews and for general performance management.
One of the most important benefits is feeding real-world data back into your quoting process to prove its accuracy. So I think you can see just how pivotal one simple real-world measurement can be, and how it can shape and influence management decisions.
If you’re not using these measurments in your agency, just think of how useful they would be. Plenty more useful information in the videos to follow.