The growth and ultimate success of any company is determined by the consistency of results. These results can only be achieved if the team consistently meets the desired goals and targets. KPIs are the means of setting and measuring the success of these goals. In this post we will briefly take a look at what exactly KPIs are and why an organisation needs them.
KPIs (Key Performance Indicators) are measurable values that show the effectiveness of a company’s business objectives. A company will set High-Level KPIs that measure the overall performance of the business towards achieving its strategy. Low-Level KPIs measure the performance of departments, units and individuals.
Although the terms “KPI” and “goal” are often used interchangeably, they are not really the same. A company’s goals define the outcomes that it desires to achieve, in a form of measurable results. KPIs, on the other hand, are indicators on the performance that tell whether the company is on track to achieve those goals.
Without knowing what the goals of the organisation are, there is no way to gauge a team or individual performance. Therefore, no ability to guide the team to improve or optimise. With clearly defined KPIs it is easier to give accountability to the specific team members and achieve transparency. Teams can collaborate better when they know exactly where to focus their energy.
Numbers do not lie! It is easy to answer the status update related questions when KPIS are clear as day. Performance analysis and making personal decisions is all easier. Work is not measured by irrelevant benchmarks such as hours at work or number of emails sent per day. KPIs let team members take responsibility of their time on the job and making sure that they align efforts with goals.
This is logical. When you implement KPIs, you will automatically need to develop systems/processes to measure them. With this information, the business intelligence gained will allow management to make more informed decisions.
Though they may be easily confused, KPI’s are not exactly an organisation's goals themselves, but they’re a measurement of them.
A KPI can indicate that your sales team is only generating 30% of the targeted number of leads that you have set as a goal. As a manager in this situation, you are instantly aware of your sales team’s progress and the reason for not hitting the desired numbers of leads.
When you’re able to measure your goals this way, it gives you the opportunity to see where the gaps in your efforts might be and subsequently make decisions that help you reach your goals faster.
If you measure the same KPIs quarter over quarter, you can begin to detect patterns in your numbers. These patterns can help you optimise your business strategies.
This can allow you to make predictions about the slow or high performing quarters. Or identify over or under performing team members and help them improve their efforts.
One of the main reasons to invest in a KPI software is integration. The data flow from different sources can be a big complication if no integration methods are applied.
Using a KPI software allows all your departments to enter their data manually into one big system, or the program can connect to different data flows automatically. Whichever method is used, you can be sure that the integrated connection will boost your business management.
Now that you know why KPIs are significant for your business, here is a handy guide to help you in defining KPIs for your organisation.
Download this FREE guide and start setting the KPIs that are relevant to your business.
This ebook will provide you with sample KPIs for the most common positions at service companies, with guidelines for setting smart KPIs.