How to Know If Your Department Heads Are Really Performing

In construction and engineering businesses, department heads play a bigger role than many directors realise. They control the flow of information, influence margins, shape delivery, and directly impact cash flow.

Yet most SMEs, especially those scaling quickly, don’t truly know whether their department leads are performing well. This happens because many owners rely on gut feel, verbal updates, or firefighting indicators rather than structured performance metrics.

In this blog, we break down how to evaluate department heads using KPIs, communication quality, results, behaviours, and accountability systems. This is the same assessment framework we use at Jones Financial Accounts (JFA) when supporting businesses scaling from £500k to £10m.

If you haven't already, you may also find our blog on How Strong Financial Leadership Prevents Firefighting useful, as it links directly to improving departmental performance.

Let’s simplify this topic, with enough depth that a leadership team can act on it immediately, but clear enough that even a 10-year-old could understand.

1. KPIs: The Measurable Proof of Performance

KPIs (Key Performance Indicators) give you facts, not feelings. Without them, directors end up relying on assumptions, and assumptions are expensive. In construction SMEs, missing KPIs can hide inefficiency, poor scheduling, low utilisation, overbilling, or underperformance for months before anyone notices.

Good KPIs:

• Improve forecasting accuracy

• Strengthen cash flow

• Protect margin leakage

• Expose operational bottlenecks

• Give directors confidence to scale

  
  

For more depth, see our article on Monthly Finance Health Checks, which explains how KPI visibility supports stability.

Your KPI set should cover:

1) Financial Performance

• Gross margin by department

• Cost-to-complete accuracy

• Budget vs actual variance

• Labour utilisation %

• Overheads attributed vs planned

  
  

2) Operational Performance

• On-time project delivery

• Job completion ratios

• Defects and call-backs

• Rework percentages

• Scheduling efficiency

  
  

3) Customer & Compliance Performance

• Complaint rate

• Response times

• SLA compliance

• Safety audit outcomes

  
  

Strategy to Implement

1. Build a simple weekly dashboard per department

2. Standardise KPI definitions across the leadership team

3. Assign accountability to each department head

4. Review KPIs every month in a structured meeting

5. Tie leadership bonuses to KPI movement, not opinion

   
   

You can download the JFA KPI Scorecard Template free on our resources page:https://www.jonesfa.co.uk/resources

2. Communication: The Hidden Indicator That Predicts Success

Department heads who communicate well reduce errors, improve collaboration, and keep projects running smoothly. Poor communicators create chaos, delays, and confusion, and directors often only find out after the damage is done.

Strong communication improves:

• Cash flow (clearer approvals → faster invoicing)

• Project delivery (fewer misunderstandings)

• Staff retention (better leadership behaviours)

• Client satisfaction (clear expectations)

  
  

Failures in communication almost always resurface later as financial problems.

What You Need to Review

Ask yourself:

• Do they provide weekly updates without being asked?

• Do they highlight risks early?

• Do they communicate upwards, sideways, and downwards?

• Do they take responsibility when things slip?

• Do they explain decisions with clarity, not excuses?

  
  

Strategy to Implement

1. Create a weekly leadership update template

2. Require every department head to submit it by Friday noon

3. Include KPI summaries, risks, wins, and resource issues

4. Review in a Monday leadership meeting

5. Score communication quality quarterly (simple 1–5 rating)

   
   

For more guidance, see our blog on Creating Accountability in Leadership.

3. Results: What You Should Actually Be Seeing

Even the best-spoken leader fails if the outcomes aren’t there. Results are the ultimate test of leadership capability.

Consistently strong results indicate:

• Controlled operations

• Accurate forecasting

• Team discipline

• Good decision-making

• Margin protection

  
  

Poor results indicate structural issues or leadership gaps.

Across departments, results should include:

Financial Outcomes

• Department profitability

• Recovery rates

• Upsell/cross-sell performance

• Overhead absorption

  
  

Operational Outcomes

• Jobs delivered vs planned

• WIP staying on target

• Reduced call-backs

• Project delays decreasing

  
  

People Outcomes

• Team performance improving

• Staff retention stabilising

• Reduction in overtime reliance

  
  

Strategy to Implement

1. Build monthly management accounts for each department

2. Highlight variances >10%

3. Require a written explanation from the department head

4. Implement corrective actions within 7 days

5. Score each department monthly and rank performance

   
   

For financial visibility tools, download our Management Accounts Pack on the resources page:https://www.jonesfa.co.uk/resources

4. Behaviour, Ownership, and Culture: The Indicators Numbers Don’t Show

A department head cannot succeed if their behaviour weakens the culture. Leaders must build confidence, structure, and consistency.

Good leadership behaviours:

• Reduce staff turnover

• Improve project harmony

• Strengthen morale

• Lower mistake frequency

  
  

Poor behaviours lead to silent inefficiency, the most expensive kind.

What You Need to Review

Look for:

• Do they take ownership or place blame?

• Do they proactively identify improvements?

• Do they manage conflict responsibly?

• Do they coach team members or micromanage?

  
  

Strategy to Implement

1. Introduce quarterly leadership reviews

2. Score behaviours, not just results

3. Provide coaching feedback

4. Move poor-performing leaders into structured improvement plans

5. Build your leadership pipeline early

   
   

Key Takeaways

• You can’t assess leadership on gut feel, use clear KPIs, communication quality, results, and behaviours.

• Strong department heads protect cash flow, margins, and operational efficiency.

• Build dashboards, structured updates, and monthly reporting to hold leaders accountable.

• Leadership performance directly determines whether a construction SME can scale sustainably.

If you want JFA to build a full departmental KPI dashboard, leadership scorecard, or monthly performance review system for your business, visit www.jonesfa.co.uk or download our free tools.

Wrapping up today's insights, tomorrow we simplify another accounting challenge.