Gettler: Hard times are different

Case study

Smart KPIs helped Cirrus thrive in the downturn, writes Leon Gettler

Key performance indicators are more than just the score card at Cirrus Australia. Cirrus chief executive officer Darren Phillips says they are part of the company's success and culture.

Cirrus is one of the few Australian companies specialising in the delivery, support and implementation of all IBM software and applications. Demand for its services is high.

In the worst business environment since the recession, Cirrus doubled its revenue and had significant growth over the 2008-09 year.

Cirrus chief executive officer Darren Phillips says KPIs are an important part of the company's successful strategy.
"If you look at my last year in the worst financial times, we actually did the best we have ever done," Phillips says. "I wonder what that would have been like if this had been a boom time?"

Much of the success, he says, comes from the KPIs. While many other companies have revised their KPIs in response to economic conditions, Cirrus has not changed them at all. It has not needed to. "I think we nailed it some time before. That's why, and we have gone from strength to strength," Phillips says.

He says finely tuned KPIs are part of the firm's advantage. "One of the reasons we have been very successful is that probably almost five years back we looked at our employment contracts and said the key was the KPIs. We were quite careful about them. One of our key differentiators in the market is how well we have done that."

The company has all the standard sales KPIs but they are structured to ensure sales people have a broad perspective, an eye on the big picture.

"You have to be very focused,'' Phillips says.

"With some of the KPIs, you have to make sure they have the broad view of everything happening in the business."

"That means when they are making value judgements in every transaction they are doing, it keeps the broad picture as part of what they do. Otherwise they become too focused on just the next outcome. So for a sales team they have the team figure, they would carry the number of the region and the whole company in their KPIs.

"We also have things like overall profitability. They are conscious of the overall margin of delivery. Now, in sales that's unusual. How can they control the overall margins? But we are open enough to share that so that they do have that as part of their thinking. It enhances the attachment of the employee to the overall outcome."

Phillips says sales KPIs are only part of the picture. Cirrus has KPIs around quality of life and quality of relationships. Phillips concedes that's unusual for an IT company but he says it is absolutely crucial. It might also explain why Cirrus hasn't lost any staff members in the past four years.

"Sales KPIs are much easier for companies to identify with,'' Phillips says. "Sales KPIs are easy to measure but it's the rest of the organisation that is the engine room.

"There has to be diligence. If you don't get those KPIs correct, you don't get the engine room right; and sales is only one aspect of the business," says Phillips.

So how does the organisation develop KPIs around quality of life and relationships?

"One of the KPIs is this - have they actually enhanced a relationship with customers, with other staff members or with their peers? Is there tangible evidence of them having done that?

"We find examples of that in their employment review and we would use that as one of those measures. It is a very measurable thing. We have actually put in measures to say, ‘What are they doing to enhance the quality?'

"Even with my most technical person, you would think they are not involved with customers and they are engine room but having these measures is a key part of being successful. It's about where they can contribute to the overall business and it makes sure they measure themselves against that so they feel their value.

"A lot of our success is attributed to the fact that we have done that really well."

While the KPIs are solid, there is room for improvement. Phillips says they always need to be reviewed. "It would be absolutely nonsense to think you have got it absolutely perfect,'' he says. "Things change all the time.
It's like setting out a score card

to some degree. That's OK but if you are never counting the score, what does it matter? It's about how often you look at it and look at those indicators.

"One of the things we have looked at is trying to make these KPIs measure back to personal goals. What we are going to do now is keep going a little bit further and say how can we encourage you to make not only positive changes in your own life, but how do we make sure we recognise you are putting that effort in?"