Organizations that are looking to make and execute better decisions will benefit from using key performance indicators (KPIs) to determine how they are performing in relation to their goals and objectives. However, to do it successfully you must learn how to choose the right ones for your organization.
Purpose of Key Performance Indicators
Key performance indicators allow organizations to improve the performance of the organization as well as the individuals within the organization. Specifically, they allow you to:
- Increase productivity. You don’t want people doing busy work or focused on the wrong things. Establishing KPIs allows you to determine whether your team is working toward the right goals and what adjustments need to occur to keep productivity high.
- Improve performance. KPI metrics provide a measuring tool for determining if employees are performing at the level expected for their role within the organization, while assisting the company reach its strategic objectives.
- Make better decisions. Choosing the appropriate actions to take depends on the goals you want to reach. KPIs help reduce uncertainty by providing a basis for determining which decisions will lead you in the right direction.
KPIs are a useful tool for creating a high-performing culture. They allow you to balance quantitative and qualitative measures to understand desired performance.
Choosing KPIs for Your Business
Choosing the best KPIs for your business requires you to understand the basic concept behind their development.
First, for it to be a key indicator it must be critical and relevant to the organization’s success. As this Industry Week article suggests, KPIs should measure performance toward the strategic objectives that you’ve laid out as part of your operations strategic plan. It is absolutely critical that these KPIs measure the most important factors in achieving your success. Stay away from the minutia.
Next, KPIs must be quantifiable, controllable, and repeatable. If team members cannot influence the outcome, you’ll find it difficult to gain their buy-in. Selected KPIs might include improved customer service response rate, increased revenue from the sales team, or a decrease in past due receivables.
Finally, a key indicator means the outcome or expectations are measurable. KPIs are a gauge. They should have a specific expected outcome that you can track over time.
When it comes to choosing the right KPIs for your organization, consider your main purpose is to determine how to drive business performance. For more information on key performance indicators, business intelligence, and related topics, review our website, read our blog, and follow us on Twitter.
To learn more about what KPIs you should be using to manage your Service Team better please check out our webinar Establishing & Managing Your Key Performance Indicators for MSPs.
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