Running Your Business with Leading Indicators

Understanding Leading Indicators

In the context of business, leading indicators are measurable factors that help predict future success. Unlike lagging indicators, which reflect results achieved (like revenue or number of hires), leading indicators focus on the behaviors and actions that lead to those results.

The Power of Habits in Business

Before diving into the practical steps, let’s take a brief look at habits. James Clear's book "Atomic Habits" sheds light on how small, consistent actions lead to significant long-term outcomes. Mitch Adams, founder of M3Traffic, and McKay Savage, the Chief People Person at M3Traffic, shared their experiences on a recent live stream where they discussed the profound impact of using habits and leading indicators in business to achieve goals.

Habit vs. Goal: Debunking Common Misconceptions

It’s easy to link habits directly with goals. For instance, many people set goals for better habits such as exercising daily or eating healthily. In business, goals might include hiring a specific number of drivers or increasing sales. However, Clear emphasizes focusing on the systems that drive habit formation rather than the goals themselves. It’s the consistent small actions, not just the grand objectives, that truly move the needle.

Practical Steps to Implement Leading Indicators in Driver Hiring

Adopting a system-based approach can redefine your recruitment strategy. Here’s a breakdown of how to implement leading indicators to enhance your driver hiring process.

Step 1: Define Your Desired Outcome

Start by clearly defining your desired outcome. In this case, it could be hiring a certain number of drivers within a specific timeframe. Let’s take a simple example: hiring five new drivers in a month

Step 2: Identify Each Step in the Process

Work backward from your desired outcome to identify every step in the hiring process. Based on the discussion between Mitch and McKay, the following key steps are essential:

• Generating Leads: The top of your recruitment funnel starts with sourcing leads. This could involve posting job advertisements, outreach campaigns, social media promotions, etc.

• Conducting Interviews: Once leads are generated, the next step is to schedule and conduct interviews.

• Sending Applications: Post-interview, you'll need to send applications to potential recruits.

• Receiving Completed Applications: Out of the applications sent, you must track how many are completed and meet your qualifications.

• Hiring Drivers: Finally, the drivers that meet your criteria can be onboarded.

Step 3: Establish Benchmarks

Utilize historical data or industry benchmarks to set realistic expectations for each step. Mitch mentioned the "rule of 50": typically, each step might see a 50% drop-off rate. Here’s an illustrative breakdown:

• From 100 leads, you’ll likely get 50 interview schedules.

• Out of those 50 scheduled interviews. 25 applicants might receive applications.

• Then 12 could complete applications successfully.

• Finally, out of those 12 completed applications, you might hire 6 drivers.

• This "rule of 50" can vary based on different factors, including geographical location and specific roles, but it provides a credible starting point.

The critical aspect of implementing leading indicators lies in consistent tracking over time. By meticulously recording data at each step, you can identify where drop-offs occur and make informed decisions to optimize the process.

Step 4: Using a Custom Calculator Tool

M3Traffic has developed a custom calculator to assist in breaking down each step and estimating conversion rates. This tool not only helps in visualizing each stage but also pinpoints areas needing improvement. Click here to get the calculator

Real-Life Example: The Approach to Hiring Drivers

In practice, one of M3Traffic’s clients wasn't hitting their hiring goals despite a robust interview process and compelling job offers. After using the calculator, they discovered their main problem was not generating enough leads. They believed their sales pitch was the flaw, but it turned out they simply needed to increase the number of potential candidates.

In another instance, a client put in significant effort to generate leads but had a poor conversion from interviews to sent applications. Focusing on optimizing the interview process—perhaps by better qualifying candidates or adjusting interview techniques—led to immediate improvements and successful hires.

Putting Theory into Practice

The concept of leading indicators is not just about knowing the process but about actively managing and optimizing it. Here’s a practical way to put this theory into practice:

Weekly Reviews: Conduct weekly reviews of the recruitment funnel. Track the exact number of leads generated, interviews conducted, applications sent, applications completed, and hires made.

Adjust Strategies Based on Data: If your leads to interviews ratio is low, consider enhancing your lead generation methods. Use different channels or refine your job postings.

Optimize Interview Processes: If your interviews aren't converting to applications, review interview techniques. Are the job roles clearly explained? Are candidate expectations managed?

Boost Application Completion: Simplify the application process, provide support for applicants, or follow up to encourage completion.

Refine Final Hiring Decisions: Ensure that your criteria for final hiring are clear and that applicants are thoroughly vetted to reduce misunderstandings or drop-offs at the final stage.

Conclusion: Long-Term Success Through Consistency

Building and refining a habit-based system for hiring requires dedication and persistence. Smaller businesses, as Mitch and McKay pointed out, may need to track data over several months due to lower volumes. Larger organizations can gauge weekly trends thanks to higher lead numbers.

By understanding and applying the principles of leading indicators, you can create a resilient, adaptable system that not only meets but exceeds your hiring goals. Whether you’re a small carrier hiring a couple of drivers a month or a large-scale company with extensive recruitment needs, these actionable steps can dramatically enhance your process.

As Mitch succinctly put it, the journey towards achieving your desired outcomes involves consistent, intentional actions focused on the elements you can control. In business, as in personal development, it’s the systems we build that ultimately determine our success.

We offer a tool that will find and auto-schedule dozens of micro-interviews on your calendar each week.

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