Finding the Right KPI for Your Business
KPI’s (or Key Performance Indicators) are a signal of whether your business is doing well or not. Measuring and monitoring your business performance is critical, but focusing on the wrong metrics and KPIs can be detrimental to your business, as you’d be spending time, money and other resources on data that does not contribute to the success of your business.
So, what makes these KPIs so important and how should you manage them? Let’s look at some best practices to help you choose the correct KPI’s and eliminate the ones that don’t add value.
Pick KPIs that are Aligned with Your Goals
Selecting the correct KPIs can be confusing, especially if you have different departments that require a different level and measurement of a KPI and have different objectives. Many businesses get caught up in different approaches like analyzing their business from the top-down or vice versa. However, it can be simpler and better analyzed if you select different KPIs for different levels of management.
For example, Executives are more concerned with long-term goals, management with short to medium-term goals and line operators with shorter term goals. Instead of trying to find KPIs that speak to all groups simultaneously, try searching for KPIs that are directly correlated to each individual’s goals and their business responsibilities.
Make Sure the KPIs are Attainable
There’s no value in a KPI if it is both costly or can’t be obtained on a regular basis. It’s important to put into question what data you’ll need to collect for that KPI, what process will have to be in place to obtain that KPI and how much it will cost vs potential return.
Make Sure the KPIs are Actionable
One of the most important factors to consider when selecting your KPIs should be whether or not you can act upon them or if they have practical value. Firstly, you want to make sure that the circumstances fueling the KPI are within your control. If they are not, then they are not actionable. Secondly, you need to present the KPI to the right people in a way that incites them to take action. Otherwise, the KPI is just another metric to look at.
Selecting the right KPIs for your business and the departments within will take some self-analyzing. It’s also important that as your business grows and develops, your KPIs develop with it. There will be times where the KPIs you were so used to may not present the same value anymore. So be sure to consistently review your metrics and make sure you are diligent in your selection and development of your KPIs.