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.
Establish Your KPI’s. How?
First, don’t be fast. Changing KPI’s without considering history can result in numbers meaning effectively nothing due to lack of context.
Start by listing the purpose of a KPI. It’s important for both management and staff to know why they need to reach a specific goal and why this KPI needs to be measured. Explain both how reaching the set goal will be beneficial to the organization and how to impact the numbers.
Set a target goal for the KPI
How often are KPI’s changed? Annual reviews are typical with a deep analysis every 5 years. During the year we recommend keeping a list of options to consider for the next formal review.
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