Everyone in a company should understand a few essential KPIs
Anyone who has read my articles or heard me speak knows that I consistently emphasize one core idea: Words matter. They can wound or wow, so they should be used thoughtfully and intentionally. Because we use words every day, most people understand how clear, intentional communication can improve both work and life.
When I say that numbers matter, however, the reaction is often quite different. Many people distance themselves, insisting that numbers are someone else’s responsibility. The people in the office, owners, or company leaders should handle the numbers, while they focus on design or inspections. If this sounds familiar, it’s time to rethink that assumption.
Everyone in a company has—or should have—at least one to three key numbers in mind. These numbers focus attention on high-value activities, drive productivity, and support growth and profitability. When employees lack clarity about their numbers, it becomes a significant issue. This is one reason fewer than 49% of erosion control and stormwater management companies don’t achieve the level of profitability and sustainable growth they should.
Across construction, environmental compliance, and infrastructure protection, organizations that grow profitably and create value for employees, customers, and communities share a common discipline: They track a set of critical numbers across their core functions. Key performance indicators (KPIs) do more than measure profitability; they help attract top talent, improve productivity and performance, strengthen accountability and rewards, and build collaborative, high-performing cultures. And when owners go to sell their businesses, good KPIs can deliver exponentially higher valuations.
The following are some of the most important KPIs:
Sales. Sales drive the business. KPIs that grow a company include the number of qualified leads and proposals generated, and a “win” rate of at least 60%. Focusing on activities that reduce your sales cycle (the time it takes for a prospect to become a paying customer) by 25% increases a company’s revenue and cash position. A customer base with 90% renewal rates, 35% annual wallet share growth, and 60% referral rates demonstrates value and supports sustainable revenue growth. Combined, these numbers determine workload stability and capacity for your team.
Operational KPIs. These affect efficiency, productivity, crew morale, and culture. Two important KPIs are gross margins in the 40% to 62% range, depending on the product or service you sell, and the minimum revenue each field employee needs to produce daily. Determining this number requires knowing your work capacity—how many days individuals or crews work each year, how many billable hours are generated, and how much revenue is produced per day. A strong individual or crew utilization rate typically falls between 85% and 90% of billable hours. Accurate job costing and estimating are essential to achieving these results.
EBITDA. Earnings before interest, taxes, depreciation, and amortization tracks financial health and supports a strong exit value. It should be in the 15% to 25% range, and the company’s cash conversion cycle should be less than 42 days to allow reinvestment in equipment, training, and workforce development.
Critical safety and compliance KPIs. These include a Total Recordable Incident Rate (TRIR) of below 3.0 and an Experience Modification Rate (MOD rate)—a measure of workers’ compensation insurance premiums as they relate to your safety scorecard—of 1.0 or lower. The goal for OSHA incidents should always be zero, along with a 95% or higher inspection pass rate. These numbers protect employees, communities, customers, and the company’s reputation and bottom line.
In the erosion control and stormwater management industries, your people aren’t just your labor force; they are your margins, your inspection pass rate, and your reputation-builders. We measure how quickly they learn and ramp up, how long they stay (customer retention KPI), who they bring into the company (internal referral KPI), and how safely they perform the work (MOD rate).
The numbers tell the story of company performance and culture. Companies that manage sales pipelines, operational productivity, financial results, safety and compliance, and employee development build organizations where projects run smoothly, regulators trust the work, and employees can build long-term careers in protecting soil, water, and infrastructure. n
About the Expert
Judith M. Guido is the chairwoman and founder of Guido & Associates, a business management consulting firm in the erosion control and green industry. Guido can be reached at 818.800.0135 or judy@guidoassoc.com.
