Which 3 to 5 metrics should my team live and die by?
The complicated life of a people manager can sometimes put you on strange paths – ones where you must try to estimate, to the best of your abilities, the best possible KPIs for your team to focus on. It’s not always like this, of course, as many people transitioning into the role automatically inherit existing, established KPIs. But what if you didn’t? What if you had to set these things up on your own?
How can a first-time manager establish the core KPIs for their team?
To avoid decision paralysis from severe metric overload, new managers must filter out vanity and counterproductive metrics to establish three to five core KPIs using the “So What?” test, set living baseline targets that protect against team burnout, and clearly connect daily frontline operations directly to broader organizational goals.
Your roadmap for defining core KPIs is:
The Overload
It’s not a big surprise that a lot of managers get trapped in a strange overload (a sort of eye of the storm, if you will) of SLAs and KPIs when they aren’t very familiar with either the business sector or leadership. It’s equally reasonable to assume most of them need a lot of help with this. It is here – in this need for help – that most companies and hiring managers fail.
I say this because people don’t always get the best possible support from higher bosses, especially new managers. Most of them just have to manage on their own, with bosses shielding themselves under the phrase “they need to showcase leadership and proper problem-solving.” This is, of course, a fallacy, as most people need help – especially at the beginning. Who is the last person you know who had to do something for the very first time, with no actual experience, no exposure to the concepts, no study, no training… and did it perfectly?
Metric overload is a very real prospect and usually kicks in from day one. Managers have no idea what to actually prioritize, what to look at, or what is impacting the business, the customer, or the people. So, they just take everything on that dashboard and start tracking every single bit of data. I talked a bit about these concepts here, so feel free to check them out if you need a bit of a deep dive: Leading Indicators vs. Lagging Indicators and Vanity Metrics vs. Actionable Metrics.
There is a very fine line between tracking everything and measuring what actually impacts the business. Most companies already have a tracking system put in place for basically everything they and their people are doing, so you have tons of data already available. But the real question is this: out of all that data, what aspects are the most crucial for your team? This is that strange spot many first-time managers (and experienced ones, too) struggle with: they can’t decide what is truly important and what is not.
Understanding KPI Selection Criteria
While this topic was already covered in my Vanity Metrics article, we do need to talk a little bit about it and clear the air. Without recapping everything, the core idea is knowing the basic difference between what is just another KPI you track because it looks good, and what is actually a real driver of your business.
Let’s take a fictional example to get a better understanding of things. Assume this is a snapshot of a report you send out to your team.
The team has 12–15 people on average, and you are tracking the following metrics:
- First Contact Resolution (FCR)
- Customer Satisfaction (CSAT)
- SLA Compliance Rate
- Escalation Rate
- Average Handle Time (AHT)
- Total Tickets Closed
- Total Hours Worked / Overtime
- Lines of Code Written / Keystrokes
- Internal Quality Audit Score
- Net Promoter Score (NPS)
- Employee Net Promoter Score (eNPS)
- Backlog Volume
Some of these fall under Quality, others under Customer, others under Efficiency, and so on. Likewise, we can look at them from a leading or lagging perspective, or see if they measure an activity or a process.
Appreciating what is vanity and what is actually driving impact requires a bit of in-depth study and a better understanding of all these metrics and the team’s activity. You can’t just pick a few and say, “I will go with these.” Vanity metrics usually look good on paper but lack context, causality, and actionability. Everything happens for a reason. So, if you measure something just because you can, but it isn’t really driving any impact… what is the point of it?
Let’s check our fictional metrics and see how they might be classified.
Let’s look at each classification and see why things are where they are.
Core Metrics:
- First Contact Resolution (FCR): Directly measures operational effectiveness and customer effort. Fixing issues on step 1 solves downstream volume. If pushed too hard, agents might refuse to escalate when appropriate.
- Customer Satisfaction (CSAT): The ultimate measure of end-user perception and service experience. Can be influenced by factors outside team control, like pricing or policy.
- SLA Compliance Rate: Ensures predictable turnaround time and operational responsiveness. Teams might cherry-pick easy tasks at month-end to hit percentages.
- Escalation Rate: Measures team capability and process health. Low escalation means strong frontline ownership. People might hide complex issues to keep rates artificially low.
Flawed / Counter-productive Metrics:
- Average Handle Time (AHT): Focusing strictly on time encourages agents to rush customers off the phone or close tickets prematurely. Drives down FCR, increases repeat calls, and tanks CSAT scores.
- Lines of Code Written / Keystrokes: Measures raw activity. Rewarding line count creates bloated, unmaintainable code/processes and encourages verbose, low-quality work over simple solutions.
Secondary Metrics:
- Internal Quality Audit Score: Ensures process compliance and policy adherence across random samplings. Can become a “checkbox” exercise if rubrics are out of touch.
- Net Promoter Score (NPS): Good macro indicator of brand loyalty, but less actionable for frontline operational daily management. High noise-to-signal ratio for tactical team coaching.
- Employee Net Promoter Score (eNPS): Measures team morale and retention risk. Low psychological safety leads to dishonest scores.
- Backlog Volume: Essential for capacity management, but driven heavily by incoming demand volume. Teams can feel punished for volume spikes outside their control.
And everyone’s favorite, the Vanity / Pitfall Metrics:
- Total Tickets Closed: High volume looks productive on paper, but often masks high repeat ticket rates caused by bad first-contact resolution. Encourages splitting single issues into multiple tickets to inflate counts.
- Total Hours Worked / Overtime: Measures effort/input rather than output or business value delivered. Leads to burnout, inefficiency, and quiet quitting.
A good test of impact is the “So What?” test. Just try to understand what is actually happening. What is the impact of each metric you are looking at? Are they generating any meaningful impact? Can you connect them with other things happening in the process (using data, not just a hunch)? And are they predictable?
Remember that balance in all things is basically the universal formula for success, and you can apply it here as well. By using your leading indicators to predict success and your lagging indicators to prove it, you are all set up. You just need to focus on the ones that are defined, as per your business and team, as CORE.
Dodging the Metric Overload Trap
Maybe some of you are wondering at this point, “Wait a minute, T.C. Bite, why are we capping this at 3–5 metrics? Why not 6–10, or why not all of them? What if all the metrics I track are core and impact the business?” These are all great questions, so let’s take them individually.
Studies show that 3 to 5 is a sweet spot for the number of key focus areas people can cope with effectively. Too many, and people get overwhelmed; too few, and it might negatively impact your business. You need to find the right spot – the number that satisfies the engagement aspect (people) while also meeting the financial one (business). This is why many people feel less than excited in their day-to-day jobs: they come to work and have to deal with a dashboard that contains 20+ metrics. It’s confusing, it’s counterproductive, and any leader who thinks everyone on their team knows them by heart and treats them all equally is kidding themselves.
As far as core metrics go, you can’t have everything be core. The concept itself refers to those very specific metrics that define the primary activity of your team. Not everything you track is core to the business, as not all metrics impact it in the same way or are relevant to the primary operation.
As a side note, having too many metrics isn’t just a problem for your team – it’s a problem for you as a leader, too. When dealing with abnormal amounts of data, and taking into account that people are less likely to cope well with it, something interesting happens: decision paralysis. I wrote an entire article about this here if you want to check it out: Data Analysis Paralysis: What, Why, and How.
One of the most frequent issues first-time managers have when it comes to core metrics is telling upper management that one-word people avoid, especially at the start of their role: NO. While you might think saying “no” can negatively impact how your boss perceives you, if you frame it properly and explain why you don’t need a metric, there’s nothing to fear (unless they are an unreasonable person or a really bad leader). Remember, you are not there to be a “Yes man.” You are there to lead your team to success, and this means saying no from time to time.
Setting Baseline Targets That Make Sense
A delicate topic in this area is setting a proper baseline. I can’t tell you how many processes I’ve seen across my years of experience that had a really bad baseline.
What is a baseline?
A baseline refers to the starting point – a reference value or benchmark that people and businesses use as a basis for comparison. In management, operations, data analysis, and continuous improvement (like Six Sigma), a baseline represents the historical or current state of performance before any process changes, interventions, or new strategies are introduced.
But what if you don’t have any historical data?
Let’s assume you are opening a very specific bakery, one where you make a product that has never been sold before, so there’s no existing market data for you to draw from. In this case, you start with zero assumptions and simply document everything in your process as things move along: how long it takes to make the product, customer engagement, interactions between sales and time or freshness, and any other relevant aspects. After a few months of gathering data, you have your baseline. All that gathered data can now be used as a benchmark for the future.
The baseline itself is only part of it; the more difficult part comes after. You have an idea of what benchmarks you are looking at, but how do you set the targets?
There’s no absolute rule here, but everyone more or less agrees on one aspect: a smart target is one that pushes your team to work hard without causing burnout. If the target is set too high, people will get discouraged or frustrated. If it’s set too low, they will just do the bare minimum. There are many statistical tools people can use to assess whether a team can reach those targets (1-sample t-test, capability analysis, etc.). However, those are pure mathematical checks; they don’t show the human aspect. The data says we can, but can the people do it?
A better way to view targets is as living benchmarks rather than something set in stone. As time passes and things change, so can the targets. It’s actually a healthier approach from a people perspective because it takes into account an aspect that is usually ignored: how people feel during a high-pressure, tight month.
Getting Operational Alignment
Another unfortunately ignored aspect of people management is connecting the daily team hustle to company goals. More leaders need to understand that just saying “do this” is simply no longer good enough. Maybe 50 years ago this was the norm because people had a completely different understanding of management. But in today’s market, with current working generations and all the changes around the world, using “do it because I said so” is not recommended.
Only a weak leader relies on that approach – weak because they say it when they don’t want to explain or try to convince people of a specific request. A good leader will go over the “why,” explain the impact to the team, and create an environment that allows others to see the bigger picture rather than just the limited view directly in front of them.
It’s a simple fact: people want to be part of something bigger. They need to feel like what they are doing matters, that it impacts the business, and that their individual activities (whether small or big) make a dent in the overall process. It’s about belonging, feeling appreciated, and understanding that you aren’t just moving a piece of paper from one pile to another for no reason.
And, as always, we go back to dashboards: the more complex, heavy, and difficult to read they are, the more off-putting they become. Keeping things simple and easy to understand feeds back into that “balance in all things” I mentioned earlier, bringing you one step closer to success.
In the end, looking over an entire list of metrics and deciding what to treat as core and what to focus on less is an ongoing effort for any manager. It is your job to keep motivation up, the business running, and customers happy. Balancing all of these isn’t an easy task, but if you truly love the work, with enough time, patience, and a desire to learn and evolve, you will become the expert your team needs. Just listen, read, and learn from everything you experience.
Until the next article, stay healthy, happy, and safe!