How To Brand Data With Operations, Finance, and HR

One thing we’ve learned working with businesses providing services over the years is how important data is to finding sustainable success and profitability. We’ve always been very data-focused, but we’ve taken it a step forward by truly branding data within operations, finance, marketing, and HR systems. 

Our data strategy allows us to have an understanding of companies current health at all times – we’ve built reports that show us how our clients are doing at a glance. But having a good system to manage and learn from your data also allows you to look at the future and make predictive decisions. 

Data and Operations

Agencies are people businesses, so at all times you should grasp where you are with your team’s capacity and make sure you have enough people to service your clients – even when you are growing quickly. Not only do you need the right amount of people, but you also need to ensure you have adequate skills within the team to deliver for your clients and do it on time. 

A big part of that is Projected Capacity. As you look to the future, do you have the capacity to fulfill your growth? Fast growth isn’t sustainable or profitable long-term if your projected capacity doesn’t match it and churn happens because of it. 

You should also look at your Client Profitability. You should have a budget for each client and project, and should know if you follow it, your financial margins will be solid. This KPI shows your efficiency and shows your billables vs non-billables utilization.

An extremely important KPI you should pay a lot of attention to is your Churn. This KPI is shared across all teams because they’re involved in doing a great job for your clients. Obviously, this one illustrates your client retention and is extremely important to your success.

Data and Finance

Main finance KPI should be your bottom line but there are other data points you should look at to see your efficiency and overall financial health. These aren’t all we look at, but they’re very important metrics:

Revenue Per Head: this one is important because, at a glance, you can see how many people you have and how much revenue each of them produces – independently of if they directly or indirectly contribute to your top line. 

‍Personal Cost as a percentage: another necessary ratio because it shows how much it costs for the whole team with everything included (payroll, taxes, pension, etc.) against your revenue. The benchmark for this KPI should be around or under 60% – it shows your financial efficiency. 

Debt and Debt Margin are what you use to keep track of your debt integrity and make sure this ratio is healthy at all times. 

As a cash flow business, Receivables are huge for any business too and the benchmark is that 80% should be paid on time, which illustrates your cash ability to pay your team and the investments you need to make. 

Contribution per Department is another data point you should look at that falls under the finance engine. This helps you make sure all the departments have the relevant resources, but that they don't maintain the contribution that you need for the business to cover their fixed cost.

Data and HR

HR is a key system that should supports your growth, and you should leverage data to measure how your team is doing and how your can best support them. These are some of the KPIs we look at:

Employee Happy Index: this includes a variable of data points that tells you how your team is overall feeling and feedback on what you can do to improve. 

Time To Hire: this helps you understand how long it’s going to take you to source a position from the time we know you need to hire. 

Absent Days: encourage your team to use their sick days whenever they need them. If at the same time, the number crosses a regular threshold for the team, which is around 4%, you know that there are deeper problems with your team’s happiness you need to figure out. 

How to update and review data for better forecasting

The past doesn’t foresee the future, but using good data helps us forecast for it. Accurate forecasting isn’t easy, it’s only as good as your assumptions – and they are often not necessarily tied to your data but to your ambitions. 

For your forecasting to be as real as possible, I recommend having a thorough process of updating all your databases and making sure the data isn’t skewed. 

For example, I look at  cash flow data on a daily basis and all other financial data on a weekly basis. You also should have a monthly presentation to the board where you present all your financial data, your YTD performance, your monthly performance, your high-level KPIs, and your forecasts. Then present the same findings to your management team internally and the same format should shared annually with your shareholders. These all help keep your finances healthy and accurate. 

On the operations side, you should also look at and update all the KPIs every week. On a weekly basis you should rectify some actions as needed like your utlisation capacity and other short-term KPIs. At the end of every month, you should present all findings to the management team and inform the heads of department if they need to pay attention to something.

And on the HR side, you should update your KPIs monthly through Disco on Slack, which anonymously collects all feedback from your team and automatically produces your Happiness Index we discussed before.

That’s what works for most of our clients in terms of updating and reviewing their data – I think you have to find your own cadence and process but it’s very important to have a good process for this so you can leverage it best. 

2 Real Life Examples of Using Data to Make Decisions:

One way we leveraged the data and brand it with all the systems within our client's was their hiring process. In 2019 we’re still finding iterations and improving it as the client was growing. Here’s the gist of it: 70-80% capacity is a trigger to start the recruiting process because we use historical data to know how much time we need to hire. 

Another example: the KPIs above showed us that, in the first four weeks of working with a client, we tend to have a load period where we over-service them. It’s normal – our team is getting to know the client, building the foundation, creating reports, etc. To help our clients at the level they need while also remaining financially efficient, learning from that data made us change our pricing policy and illustrate that extra allocation. 

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