What are KPIs and Why Do You Need Them?
You spend hours developing a strategic plan and creating a roadmap to success. Along the way, you need guideposts to determine if you are still on the right path or need a change of direction. That’s where Key Performance Indicators, or KPIs, come in. KPIs are important guideposts for every business.
What is a KPI?
According to KAIZEN Analytics, KPIs are “measures that help decision makers define and measure progress toward business goals. KPI metrics translate complex measures into a simple indicator that allows decision makers to assess the current situation and act quickly.”
Which KPIs are right for you?
Your strategic plan is in place. Now, think about what is vital to the success of your business, your clients and your employees? How do you measure those? Identify clear, actionable metrics that allow you to quickly assess if your strategy is on the path to success.
It’s a challenging task and a delicate balance between too much data, which leads to overwhelming details with no real insight and too little data, which leaves you stalled on the path with no real insight.
Here are a few sample KPIs to get you thinking about the right ones for your business:
- Client satisfaction ratings
- Cost of client or opportunity conversion
- Company, department or client profitability
- Financial growth
- Staff growth
- Employee utilization
- Projects delivered on time
- Budget vs. cost on projects
How to make your KPIs work
Simply having a metric to monitor isn’t going to impact your business. For each KPI, you should have an action plan. Here are a few questions to answer for each KPI:
- Who owns the KPI?
- How will you communicate the value and importance of this KPI to staff? Who needs to hear the message?
- What are the parameters that flag the KPI as “at risk?”
- What is the action plan for making changes when the KPI is at risk?
- How does this fit into the overall strategic plan?
- Is the KPI detailed enough to be measured effectively?
Don’t wait until next year. Select your KPIs today so you can quickly assess where you are on the path to and actively stay the course or change direction on the road to success.
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