Key Performance Indicators: Your Key to Success
Do you desire and strive for excellent customer service and employee enthusiasm? Do you have clear numerical goals? Do you measure progress of these goals? Key Performance Indicators (KPIs) are a necessary part of any business striving to be successful. In all business plans there are an objective and goal a company wants to meet. KPIs can be described as benchmarks that inform businesses about whether or not they are meeting their projected goals. KPIs must be quantifiable and have a time frame established with key checkpoints.
Key Performance Indicators (KPIs)
KPIs vary depending on the type of business and the objective you have. KPIs should focus on the aspects of your organizational performance that are most critical not only for the current success but future success. KPIs can include sales appointments, shipments, gross margin per work order, hours of labor worked, order input, quote volume, revenue, aged receivables, and many more. However, one mistake a business can make is to measure too many things. “Without a standard, there is no logical basis for making a decision or taking action,” according to Joseph Juran. As we consider what to measure, we must have a standard or a goal to attain.
KPIs make it easy for managers and executives to track performance indicators for organizational goals. KPIs provide business executives with a high-level, and real-time view of the progress of a company. One can check progress and ratings, ensure goals are in line with expectations, and quickly get the “big picture” on the status of your overall performance. KPIs are a valuable form of business intelligence.
A main benefit to KPIs is keeping the organization working toward common goals. People work only on projects that are productive, which eliminates useless activity. People also accomplish their objectives when they are clearly defined and expectations are established. Other benefits include:
- Increased Productivity
- Improved Sales
- Focused Performance
- Standardized Reporting
- Making faster and smarter decisions
- Communication and Accountability
- Greater Profits
- Improved Customer Service
What do you do once the goals are established? Monitoring, managing, and analyzing KPIs does not have to take time or cause headaches. Dashboards can be used to help monitor and organize KPIs. The KPI Dashboard may be sales figures (global or regional), trends over time, supply chain information, or any other long-term consideration that may be essential in gauging the health of the organization. However, it should be noted that KPIs should not only reflect the organizational goals, but should also be quantifiable.
ERP’s KPI Dashboard systems can allow users to define leading and trailing indicators, and measure these key performance indicators in real-time, generating projections and highlighting deviations from the plan for correction. Graphical depictions on a KPI Dashboard clearly display indicated trends and provide easy-to-interpret assessments at just a glance. KPI Dashboards are easy to use and having a browser-based application that facilitates gaining anywhere, anytime access to the information you require.
There is no question that businesses who measure performance have considerably more success because they are cognizant of the areas that are important to their success and are constantly improving upon them. Make sure you have well-defined business goals and objectives, and link your KPIs directly to those goals. It is important to involve key players in implementing KPIs. You want to ensure you have complete buy-in from them, so they do not think you are “checking up” on them or trying to make them work harder. Setting these goals can be used to motivate the team and improve their results.
As Peter Drucker would say, “What gets measured gets done.”
Interested in talking to someone regarding best practices to kick start your company’s KPIs? Call 713-680-2247 or request a demo.