In order to improve or maintain performance, you must use metrics to track outputs and overall productivity. Key Performance Indicators (KPIs) are an ideal tool when you need something measurable to guide everyone’s efforts and ensure the company is poised to reach its goals. However, if you don’t select the right KPIs, then achieving that goal can be a challenge.
Determining which KPIs best apply to your business may seem complicated. There is no universal set of KPIs that apply to all companies, or even industries. But with a little time, attention, and analysis, it is possible to create a strong list that reflects your needs and objectives.
Outline Your Goals
Traditionally, KPIs are directly tied to your goals. They provide you with data that lets you know if the business is moving in the proper direction. However, without goals, the information isn’t particularly helpful.
Before you select what KPIs you want to track, you must outline our goals as an organization; ensuring all objectives are measurable, i.e. increasing sales by 10 percent or reducing material costs by 15 percent.
In contrast, simply wanting to reduce expenses without an associated metric, is not effective since it doesn’t create a point that designates success. Its ambiguous nature leaves room for interpretation as well, which isn’t ideal.
Consider your overall goals, how you can quantify them, and don’t be afraid to be aggressive. Just make sure they are achievable.
Consider Your Growth Phase
Companies in different stages of growth have varying priorities. For example, a startup may find more value in KPIs that validate the business model or monitor customer acquisition rates. However, an established business may put greater emphasis on metrics associated with tracking returning customers or cost per acquisition.
Considering your phase can help you determine which KPIs provide the most value for you regarding growth, which is a valuable addition to a KPI list.
When it comes to choosing KPIs, a “less is more” approach is generally the best method. Instead of selecting dozens of metrics, identify a handful that best speak to your goals.
With keeping the list shorter, it makes tracking much easier. This lowers the administrative and reporting burden associated with monitoring KPIs. Plus, it gives everyone a quick reference as to what matters most to the company, allowing employees and leaders at every level to stay focused on what is truly creating value for the organization.
By choosing the right KPIs, you can monitor the company’s progress as it strives to reach its goals. The ones you select need to be based on your unique circumstances and priorities. Otherwise the metrics will provide you with little value.
If you are interested in learning more, the professionals at Solving IT can help. Contact us to discuss your needs today and see how our services can benefit you.