How to measure a virtual team’s performance?

So, you have a virtual team. You can’t see them so you cannot measure them by face time.

Conclusion?

You need to specify and manage the results – the outcome – , because that is about the only way you know whether the team is succeeding.

Alright, so how to measure the results?

I’ll use the Operational Excellence here (a method towards sustainable improvement of key performance metrics for any type of organization), which tells us to use both leading, lagging and forward looking indicators.

So let’s dive in.

Lagging indicators tell you how you did

Lagging indicators show the result of actions you took. Examples include

  • sales
  • number of issues resolved
  • customer satisfaction
  • average (call center) call handling time
  • gross margin
  • new customers
  • revenue
  • eBit
  • car accidents
  • temperature

Lagging indicators are a measure of the past. They tell you how you did and what happened.

In a way, it also tells you how you did as a manager so far.

Lagging indicators strangely tend to get the most attention from superiors and shareholders because they demonstrate tangible results. That’s why they are often used in reports.

But: if you only use lagging indicators, it’s like driving a car by using the rear mirror only: you only see where you came from. You’re driving blind.

So, you also need to measure the actions that affect the lagging metrics.

To do so, you need to look into future.

You need leading indicators.

Leading indicators tell you how you are doing

Leading indicators are actions that can be tracked during a process.

They tell you that you are driving at 100 miles per hour and if you keep doing so, you will be a hundred miles from here in an hour’s time.

Leading indicators can include:

  • The number of calls a (sales) person made per week
  • The number of calls that turned into opportunities
  • Offer hit rate
  • Number of proposals sent
  • Training attendance
  • Material availability
  • Starting and finishing on time
  • Reduced work in progress
  • Number of root cause analyses done
  • Completeness of support ticket information

Leading indicators can be more difficult to track if there isn’t a proper system set up to monitor the team’s patterns and behaviours.

But, if measured properly, leading indicators will pinpoint issues in a process, but also to assess coaching and guidance tactics and whether or not they are effective.

In any case, leading indicators are the ones which you can see in the upstream. Let’s say that you are a IT project manager in a software company. You will definitely be interested in what the sales department is doing so that you can allocate the right people to the right projects at the right time. In this case, your leading indicator could be number of new sales / contracts / deals.

Similarly, your lagging indicator (of, for example, ongoing and about-to-be-completed projects) is a leading indicator to customer support.

However, you still need a third metric and that is called forward looking indicator.

Forward looking indicators show what’s out there in the future

There are things that affect the leading indicators, too. They include

  • Government legislation
  • Company policies
  • Strategy

These are the general guidelines based on which leading activities will be arranged.

Combining all indicators

All of the different indicators provide different and important value to an organization.

Lagging indicators are useful for systematic analysis and to understand the bigger picture of a function or a process. But with them you’re can really only analyze behaviors and results that have already taken place, and can’t be changed.

On the other hand, also monitor and analyze leading indicators on a day-to-day basis. This gives you the opportunity to adjust behavior and goals on the go, and not only after a cycle has ended.

Make the metrics visual

How do you know how you are doing? How do you know how anyone is doing? How to communicate both?

Make it visual. Record the metrics and share them openly so that everyone knows where the team is.

Only by doing so can you start having fair and constructive conversations about how to continually improve.

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