Key Performance Indicators (KPI’s) are methods executives use to measure the organization’s performance and convey to staff what you have decided is important to success. Core to the concept of KPI’s is the old adage: What gets measured gets done.
Executives and all staff use KPI’s to determine the overall health of the business and implement changes now and in the future. Performance indicators are usually grouped together for high level reports and deliver insights on everything from financial to operational to employee and customer satisfaction data.
KPI’s used are a direct result of an executive’s determination of what is important now given what is known and projected about limits and opportunities. A successful executive will have both some favorite indicators they’ve used over the years as red flags plus a broad base of KPI’s with historical comparisons to show if there is a new trend developing as the business and market evolves.
While there are standard KPI’s across all businesses, the KPI’s you extract are part of what makes your executive leadership unique.
Your KPI’s – Previously we cautioned against changing KPI’s without considering context. Context means results may not be valuable for months or longer. Industry guidelines show what a “correct” ratio is but your business is unique so insights are seen only by tracking over time.
Many valuable KPI’s start with elements thought to be unmeasurable; however, every work function has an INPUT and an OUTPUT. Establishing what these are provides a basis for measuring and then improvement.
KPI’s Up = Business Up?
As an executive you need to be on guard for KPI’s that do not track the complete picture; hence, the need for regularly exploring new KPI’s that reveal more details of your business.
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