Profit is essential and most savvy founders track revenue, burn rate, profitability and other financial metrics to gauge the health of their business.
3 Top Reasons to Track People Metrics
- To make sure founders are mentally and physically fit to lead
- To make sure employees are loyal and engaged
- To make sure leaders are leading effectively
Metrics related to people also help founders assess the strength of their business. It’s people, after all, who develop the product, create the marketing strategy for it and sell it. People comprise the heart of the startup. However, their contributions can be an intangible asset that is hard to measure. When something is not measured, it’s hard to know how to improve.
Here are five metrics that provide invaluable insights into your company’s human capital — the underpinning of the financial metrics. Tracking and analyzing these metrics alongside financial data enables a culture of data-driven decisions that nourishes a thriving startup.
Leadership Behaviors
Tracking leadership behaviors allows founders to identify strengths and weaknesses that can direct and inform the development and growth of the leaders. When founders lead effectively, it fuels their team and turns into sustainable success. Here’s how to measure behavioral performance.
360 Rating Assessments
These gather feedback on a leader’s competencies (e.g., decision-making, communication and direction setting) from investors, advisors, peers, subordinates and clients. After all parties have submitted feedback, the data is aggregated to provide a comprehensive view of performance.
Qualitative Feedback
This method asks open-ended questions and then analyzes the written comments, offering in-depth insights into a leader’s day-to-day interactions and impact on team dynamics.
Assessment Centers
These centers evaluate leadership potential in a half-day to two-day experience that includes simulations, case studies and group exercises. These activities often assess a leader’s decision-making, problem-solving and interpersonal skills under pressure.
Use the data you gather to identify areas for coaching or development programs, foster a culture of continuous learning and improvement and provide performance evaluations to their investors and board of directors.
Founder Team Health
The startup journey can be intense. That is why founders, at the early stages of a startup, should focus on building a healthy team. A healthy team maintains a psychological safe environment where members trust one another, are cohesive, and have built norms and processes that facilitate effective collaboration. When a team is healthy, it is more engaged and productive, which ultimately leads to better startup performance. Here’s how to measure founder team health.
Team Health Surveys
Using structured questionnaires, team members rate perceptions of their team’s level of psychological safety, cohesion, role clarity and other conditions necessary for team effectiveness. Responses are anonymous and results are aggregated to provide a score for the overall team.
Team Member Ratings
Team members use structured questionnaires to rate the performance of each of their individual team members. Responses are anonymous and results are aggregated to provide a score for each team member.
Analyzing team health survey results helps founders identify areas needing improvement, such fostering trust or clarifying roles. They can then implement targeted interventions, such as team-building exercises or 1-on-1 meetings, to address these specific issues.
Organizational Culture
Organizational culture includes the set of values, beliefs and behaviors that define how members are supposed to behave. When members have clear expectations for how work should be done, employees will be more effective, productive and engaged. Here’s how to measure organizational culture.
Employee Surveys
Employees rate their perceptions of and experience of the organizational culture. These surveys encompass a broad range of aspects but should focus on the values and behaviors that are most important to a leader. Responses are anonymous and results are aggregated by role or department.
Behavioral Observations
This involves systematically observing a leader’s behavior in different situations. Observers focus on specific behaviors that embody the culture and often use a checklist of desirable behaviors. Results are synthesized and reported in aggregate.
Qualitative Interviews and Focus Groups
Structured, in-depth conversations provide a platform for employees to share their experiences and perspectives on leadership and employment. Open-ended questions and group discussions can uncover valuable insights that might not be captured through surveys.
There is often a big disconnect in the culture founders desire and the actual culture. In the data, founders should look for patterns and inconsistencies between what they say the company values and is important and how employees actually experience the culture.
By identifying these gaps, founders can initiate open conversations and launch programs that bridge the disconnect, fostering a strong company culture.
Employee Experience
Similar to user experience (UX) from product development methods, employee experience focuses on the perception and feelings that employees have towards work and the company. Prioritizing EX fosters a loyal, engaged workforce that drives innovation, superior customer service, and ultimately, sustainable financial success. Monitoring and cultivating a positive EX can help founders avoid turnover which is extremely costly financially and hinders the company’s performance.
Employee Surveys
Employees fill out structured questionnaires to rate their EX and attitudes towards their job. These surveys encompass a broad range of aspects including commitment, satisfaction, inclusiveness and motivation. Responses are anonymous and results are aggregated by team or department.
Employee Pulse Surveys
These are similar to typical surveys except they are much shorter (less than a minute to complete) and are administered with higher frequency. Pulse surveys allow founders to gather real-time feedback.
Qualitative Interviews and Focus Groups
These structured, in-depth conversations that provide a platform for employees to share their experiences and perspectives. Open-ended questions and group discussions can uncover valuable insights that might not be captured through surveys.
Employee experience data is a good way to determine whether the employment experience is positive. This data can also be used to gauge employee sentiment towards more narrow topics like recent changes, communication initiatives or new company policies.
Stakeholder Well-Being
Many other people are critical to a startup’s success, including customers, suppliers, partners, communities and shareholders. Measuring the well-being of each group is critical because they all influence the performance and reputation of the company.
Stakeholder Experiences
Key stakeholders use structured questionnaires to rate their engagement and perceptions of the company. These surveys encompass a broad range of aspects including commitment, satisfaction, inclusiveness and motivation. For example, founders can measure investor confidence, revealing level of interest for future rounds.
Stakeholder Retention
This assesses a range of metrics that track the loyalty and continued engagement of various groups invested in the success of the company. For example, customer retention data can be measured by evaluating repeat business, subscription renewals, etc.
Analyzing stakeholder engagement and retention data enables founders to gain valuable insights into the effectiveness of their communication strategies, the overall satisfaction of key partners and investors and potential areas for improvement.
Focusing on these human-centered metrics enhances decision making and ultimately improves the performance of the startup. Actively monitoring these metrics enables funders and founders to gain a deeper understanding of the company’s strengths and weaknesses. This knowledge empowers them to make informed decisions that propel the business toward sustainable success.
