Key Performance Indicators (KPI’s) form the scorecard by which to measure your company’s progress, efficiency, and direction.Whether you track them in reports, spreadsheets, charts, or a combination of methods, tracking and measuring KPIs well is an important part of any successful business. Here are a few ways you can employ to measure KPI’s effectively in your own company.
Start on the Right Foot
Useful Key Performance Indicators must be specific, measurable and actionable to be of value to a company.A good way to determine useful KPIS is to consider your business strategy and goals, then align these ideas and values to more specific actions, of which performance can be evaluated on a high-level basis. Involve your department heads to gain wider perspective and input on company KPIs.
Only Measure What You Need
A common trap for KPI measurement is to record too many, or irrelevant KPIs. Remember that just because you are able to measure something, does not mean that monitoring it will benefit your business. Go back to basics and consider what is most important to your business – visitors, profit increase, units sold, return on investment – and create and measure your KPIs from that perspective.
Know Your Current and Future Needs
While you may be a modest-sized company now, it’s likely that your business will grow, and HR and training needs will grow with it. This is an area that can be managed from a more solid basis, through a reputable Registered Training Organisation (RTO) or relevant software. Axcelerate (axcelerate.com.au) is a good example of this.
Measuring and recording KPIs is important, but if you are not reviewing and updating (where necessary) on a regular basis, all the work you put in to create them is worthless. KPI’s need to act as a snapshot of your business. If you never develop the film, how do you know what it the photos look like? Many small businesses get caught up in working inside their business and forget to work on their business. If you keep your eyes on the KPI’s, you will have a much stronger business strategy in the long term.
The condensed version is: create and measure your KPI’s with the end in mind – stay focused on the result and keep it relevant.
How do you measure KPI’s in your small business? Is KPI measurement/review on your agenda?