How to understand if your business is performing and on track to achieve annual objectives
Key Performance Indicators (KPIs) play an important role in any business that values information and measuring progress.
KPIs can be used to track the performance and achievements of individuals, small teams, larger departments and the
First things first – your requirements!
– Why do I need a performance measurement system?
– What benefits do I expect from implementing this system?
– What is the impact on my
– Will the organization be willing to change behavior if needed?
– Will I commit to the process even though information produced by the system is negative?
To answer these questions, we need to know what we are looking for
Measure – measure is the simple verbal expression of what you are. Be as expressive as you can with your measures. In this example, we see “number of new customers” – that’s fine. There’s nothing wrong with it, but it can be advanced to be more expressive. A more descriptive measure would be “number of new customers this year” or “number of new customers for a certain product or a certain service”. So let’s call this “number of new customers this year.”
Target – target is the numeric value that we want to achieve. The target needs to be apples-to-apples when a goal date is set or the due date is set. We want to achieve a thousand new customers by the end of the year, so the due date and the target work hand-in-hand. Measuring the target needs to work together. So it’s a number, so this is a number. This is a percentage, this is the percentage.
Data source – where is it coming from? Be clear about what the source is. Most organizations have all sorts of data sources and fragmented systems. Make sure you identify where this data is coming and you’ll save a lot of time.
Frequency – how often are you going to be reporting on this KPI? Ideally, you’re running monthly strategy reviews to report on the progress of your plan, in which case we’d like to see monthly KPIs. So you’ve got to be able to pull the data monthly to make that happen. That’s not always possible, but try to get there. Some organizations have some that are weekly and others that are daily. Monthly is a good place to start.
I feel one of the most important areas of the business, if you want to review performance is to fully understand the KPIs. Know where to collect the data and understand the monitoring process. If you set the KPIs correctly within the business, you will be able to successfully monitor performance against set objectives.
Everyone is in business to make money but how do you know you are on track to achieve XY turnover for the year, well strategically placed KPIs will do that for you so do not overlook this management tool if you are trying to grow a business and make it successful
By – Robert J Burrus