PEO Insider Issue

A company’s story is often written succinctly on its website, with details of the company’s history, its values, and its aspirations for the future. Internally, however, company leaders can capture a more telling story. 

Operational metrics, while often unique to each company, depict a different story. At G&A Partners, operational metrics go beyond financial data – which is important, of course – but tell us whether we’re improving operationally over time and heading in the right direction. By identifying the operational metrics that matter most to your business, tracking them regularly and consistently, a story unfolds. One of client and employee satisfaction, operational efficiencies, and long-term stability that leaders can utilize when making business decisions that drive a company toward the future.  

FREQUENCY OF TRACKING METRICS MATTERS 

Tracking operational metrics is important, but the frequency in which you do this is key. By tracking these metrics consistently and on a regular basis – whether weekly, monthly, or quarterly – you can plot a more reliable trend line to each metric. Then, as you identify trends within the data, you can react more quickly. Infrequent tracking, however, results in data that carries little statistical significance and can potentially lead you off course.  

At G&A, we believe that when our employees are happy, they will take better care of our clients, which leads to happier clients who are more likely to stay with us. We choose to track employee feedback on a biweekly basis so that we have a true gauge of how our employees are feeling. By tracking this metric often, we have a better understanding of the data we collect and can identify trends before issues arise. 

There’s more to gain by tracking employee feedback, however. While we hear complaints from employees, we also receive suggestions that rise to the top of our agenda, which then begins discussions on how we can implement these ideas. When our employees realize we are listening and reacting to their feedback, they are generally happier and feel more encouraged to share valuable feedback in the future. 

Client feedback is another metric we value and measure often, but as with all of our operational metrics, we’re careful not to overreact. If one client reports a technology issue, it’s likely confined only to that client. But if we hear from multiple clients that there is a client service issue, then our team dives into the issue to determine the cause. Based on the team’s findings, we can quickly adjust our needs to resolve the problem. But it’s that consistent and frequent data that allows us to stay the course rather than overreact to the metrics. 

IMPROVING EFFICIENCIES AND RETENTION 

Operational metrics also tell a story about how efficient an organization is and its long-term stability. Through NAPEO’s Financial Ratio & Operating Statistics Survey Report, we gain insight on staffing ratios across the industry. With this data, we have a sense of how many employees are needed in each department to be effective, while also recognizing the things that make G&A unique.  

Internally, we then ask how many operations employees are needed to provide world-class services to our clients. If we can become more effective with the number of employees required to service our clients over the course of a year, then we know we’re getting incrementally more efficient. If that number increases rather than decreases, that’s a sign we may have hired too many people or have become less efficient in our processes.  

Of course, one of the challenges for PEOs is that we’re a labor-intensive business, and generally, as PEOs add more clients, we must also add more people. More and more, operational efficiencies are coming in the form of streamlining administrative or repetitive work, whether that be through process improvements, automation, or outsourcing.  

Metrics surrounding retention are also valuable operational metrics in helping drive business results. By religiously monitoring client and worksite employee retention and gross margin retention, we can then compare that data to the previous five years as a percentage for retention. This gives us insight on how we’re doing, which ties back to the employee and client feedback metrics we also track religiously. And while client and worksite employee retention are obviously important in our industry, gross margin retention is arguably the most important. Not only does it pay the bills, but it serves as an indicator of long-term stability and a basis for company growth. 

Strong client retention also comes from taking a strategic and disciplined approach to attract like-minded clients who are growing and thriving. Another key metric then is current client growth, which equates to incremental gross margin that generally doesn’t require the same incremental expenses. Perhaps more importantly, if clients are growing and we are holding onto them through retention, then operationally we know we are on the right track.  

And that’s a story every company wants to tell. 

AARON CALL
Chief Operating OfficerG&A Partners Houston, TX