Measuring productivity and setting target for it in a professional sourcing team is no easy feat.

Importance of the right metrics

The lucky ones amongst us find joy in what they do. Either in their work lives, or in their family lives, or in their leisure activities. Some of us are extremely lucky and find joy in all three. Let us skip talking about the joy in family life – while it is of utmost importance and arguably has the most impact on your work life as well – I’d like to talk about the possible connection between the other two.

Why I have picked leisure and work? Because ironically what creates part of the joy in one, makes the other hard. Metrics. Statistics. Results. Comparisons. Why cannot we feel the same excitement about our development in work and why are we so keen on downloading fitness apps, sharing achievements, joining challenges online and buying GPS watches, Fitness Activity Trackers, Cycle computers, etc. so that we can later on dig into a bunch of data and statistics to find out how good we are and which is the way we can develop ourselves further.

After all, it’s just metrics. Who hasn’t got or given certain KPI’s, who wasn’t in the situation where s/he felt pressed under such KPI’s? Why the stress here and why the joy on the other side? I know, I know, sport is about you, your health, and etcetera. Forget it. Very few have given up smoking to be able to run more. Even less gave up drinking their occasional beers/glasses of wines or eating their favourite chocolate bar. (Some even do sport as a self-preservation in order to be able to consume that unhealthy stuff without having to feel sorry for it)

My theory is that the key (at least partly) to motivation and feeling joy in our sport achievements lies in the measurement of development. How do we measure development? By metrics. By Statistics. By results. By comparisons. What’s the difference then? Can we take example of some of the measurements we value in sports, so that we may invent some more relevant ones for our work (in my case Procurement) that, at the end of the day, may also give some joy to (=motivate) our fellow workers?</p>

Measuring productivity in Procurement: the Saint Grail

I should have started with the core problem: we wanted to measure productivity. In Sourcing. How do you do that? Measure delivered benefits, of course. But is it really that easy? What if you have a large sourcing organisation to run, with a big matrix, where you have horizontal and vertical responsibilities, regionally, in categories, locally and globally, etc? How do you decide if some results were good or bad? Or good enough?

It depends, you may say. And yes, it does depend on many things. Are you a regional category sourcing manager at a large blue-chip company? 2 million$ benefit/year? How about that? Or are you a local sourcing manager at the same company, responsible for several categories, serving consequently many stakeholders and on top of that, the real big benefit-cases you’ll have to hand over to the category guy mentioned before? Well, in your case, 500k annual benefit delivered seems OK, doesn’t it? Considering that you scratch them together from 30+ projects, while the regional category guy ran 2 eAuctions and he nailed his 2million?

Unfair, one might think. Irrelevant measure, I say. At least from a people management point of view. I would want everybody in my organisation to be measured equally. I would want to know whether my people are up to their jobs or not, irrespectively from where they work and what their exact responsibility area is. So, how do we go about that? This is where we can take a step back and look around in other parts of our life for a little inspiration. I’ve chosen leisure and sport.

Sports? How come?

I don’t know how familiar you are with golf. I’m not at all. I only know one golf-word, with the help of which I can ask one golf-related question, which usually helps me get along with a conversation, as I only have to ask it once and listen to the passionate answers afterwards. Nonetheless, I do know, that in golf your target is, to get through all the holes at a golf course with as less strikes as possible.

Are you maybe better familiar with swimming? I do swim occasionally, however I have no idea how olympic swimmers are measured at their trainings. (Which actually is a shame, given that my country of origin, Hungary, is outstandingly good when it comes to olympic watersports). I’m quite sure however, they are measuring time in which you complete one length in the pool as the whole purpose of the training is that you swim across the pool faster than the others.

Before you ask, I wasn’t the one to encounter the connection between these: I also happen to be a tech geek and love those little gadgets, including fitness gadgets. And in one of them I came across the term „SWOLF”.

Enter the SWOLF

SWOLF, in case you don’t know it, is a combination of the words Swim and Golf. It stands for a measure, which combines the idea behind the main golf measure and the main swim measure and uses it for measuring swimming efficiency. How? In SWOLF what you do is you take your time you spend for completing a length in the pool, and add to it the number of handstrokes you had to make to complete that length. What’s the point here? The point is that you may reach a better time if you are spinning your hands like crazy in the pool – but you can be sure, that it is not the right technique and you can also be sure that you will not complete too many more lengths this way. In other words, your one-off result is impressive, yet it is misleading, as you are inefficient, you were doing it wrong and you will not be able to constantly keep up this performance. The real development is when you are completing one length in the same time but with lessstrokes. Or, if the number of strokes remains unchanged, but you get faster. Either way, you are developing and performing better. Which obviously means, that in SWOLF, your target (just as in golf, hence the term) is to get a lower and lower number per length. If your SWOLF number sinks, you became a better swimmer. Easy as that. Why? Because you are becoming more and more efficient.

So how can we use this in Procurement? How can we make our regional category manager and local sourcing manager equal in terms of measurement? Can we measure them with one KPI that levels out the differences in the circumstances they have, yet takes into account both factors we care about? Using the idea of SWOLF, maybe we can.

As we could see, in swimming the key attributes for measuring swimming efficiency are the number of strokes and the time. If we translate it into procurement (or sourcing, to be exact) – your key attributes to measure productivity would be the amount of benefits and the number of projects from which you get these benefits from. You may argue on the number of projects bit – but think twice: involvement, visibility – aren’t they the key buzzwords for most Sourcing Organisations? As an organisation, the more projects you get involved to, the more benefits you may deliver on the long run. Tell me a better productivity measure, I’m open!

Should you target someone on benefits however, once they are reached, one might become complacent and not look for new challenges in new, possibly yet unaddressed areas. Worse, local and regional members of your Organisation will fight on projects (and their benefits) instead of collaborating on them.

On the other hand, you cannot target anybody to complete 30 sourcing projects per year, as it will only drive the wrong behaviour: either people would be willing to work only on small and quick projects, and/or they will not be willing to jump into a bigger one as it will consume their time from doing the small projects, from which they can possibly do 30 a year to meet your expectations. You may try to target everybody on both, but you can be sure that they will either fail on or will be frustrated about at least one of those targets – which is again not what you really want. Find joy and motivation, remember?

And, at the end, does it matter to you, how many projects people complete? No, it does not, per se. What does matter to you as – say – a CPO, is that your Organisation makes an impact, delivers benefits to the company and is constantly motivated to find new and new areas which have previously been unaddressed. So how do you do that?

PROLF of World, unite!

Let’s imagine inventing a measure called „PROLF”. (Sorry for this name, really – if I would be more creative, I’d work in Marketing) It would combine these two measurements (in a way SWOLF does in swimming): benefits, and number of projects. However, to do this, we have to level out those 2 numbers first. The number of projects is the easy part: it is 0-X, but always a clear and easy number, probably not above 50. The amount of benefits is trickier: the expected amount may depend on the industry, the category, the company, etc. What we can do here is that we simply divide the benefit amount with any round number (be it 1million or 10 million, or 100k) that fits your organisation so that the result will be a number between 1-50 somewhere. What’s important is, that once the quotient which fits the organisation has been chosen, you should stick with it and apply it consequently to the entire organisation.

Sticking to the example of the regional category manager and the local sourcing guy: the regional colleague has delivered 2 million$ benefits from 2 projects. In this case (where 2 million is quite a remarkable result) I would use the „divide by 100k” rule to level his 2 million with the amount of projects. His PROLF number would consequently be 22. (2million/100k=20 + 2 projects) At the same time the local sourcing manager has delivered 500k benefit, but she has been working like crazy for this and it took her 30 projects to scratch them dollars together. Her PROLF number would be 35 (500k/100k + 30 projects). Naturally, as oppose to swimming or golf, here the higher your number is the better you are performing. PROLF would actually work as an inverse SWOLF if you like.

Would this be fair? Certainly more fair then giving credit for someone, who made 2 eAuctions all period. 2 Million$ sound great – looking at the PROLF value however it sounds much more like a hell a lot of missed opportunities. You say 500k is less worth than the 2 million? You might find another 2-3 million$ project arising from the credibility that’s just been built by a stakeholder amongst those 30 little projects. It also may keep up a healthy competitive spirit within the organisation. It might give pride, self-respect and visibility to even lower pay grade professionals delivering lower benefit amounts, while keeps high-profile sourcing guys on the ground and on the roll. You, as a leader can meanwhile easily pick the low-performing, praise valuable performances, smooth out the relationship between local and global parts of the organisation (which is not a negligible one either..).

Coming back to the original question: probably the reason why we find joy in measuring our development in sports, sharing achievements and competing on those is that we are all measured by the same metric. We may have different targets, but the metrics are the same: distance, calories burned, average speed, lengths completed – or SWOLF, for that matter. Whereas at work, teams usually get different metrics applied, even within an organisation that’s essentially serves the same purpose for the company. Which is a little unfair and always a source of tension – as long as we could also do it differently. While the above is of course a very narrow use case and rather just a food for thought; with a little creativity, you can certainly apply this to even a smaller Procurement Team, where you do not have regional and local staff, but you have strategic and operational stuff. A little tweaking in the numbers and you’re ready to go. It really only depends on what are the important numbers for you. Combine them, level them out, add them up and there you go.