Key Performance Indicators (KPI’s) provide measurable ways to monitor important metrics, but most importantly, KPI’s are a fast way of identifying if you are on track or off track.
At Kendons we recommend identifying three – five key business drivers to monitor regularly that drive success within your plan and assist in achieving goals.
Here’s how we recommend implementing a KPI structure (or dashboard).
1. Determine which Key Performance Indicators (KPIs) are important.
These KPIs should have the greatest influence on achieving the plan or goal. For example, if the goal is to increase revenue it could be to maintain an average hourly rate invoiced of $X, or achieve X% gross margin for any job. Perhaps the goal might be to increase customer service levels so therefore a KPI of responding to all customer enquiries within 24 hours could be a great place to start.
When deciding which KPIs are important, constructively look at the KPIs and decide which ones, when increased or decreased, will have the biggest impact on future results? Choose no more than five to measure and focus on.
2. Work out how to measure your chosen KPIs.
The measurement process should be automated wherever possible. Most software as a service (Saas) such as accounting packages, customer relationship management software or job tracking software will measure KPIs.
3. Produce a simple one-page report.
Produce a report either weekly, fortnightly or monthly to track results and progress. Set aside time to go through this report every time it’s produced and share the results with the team. Even better, some Saas products have a dashboard upon logging on so you can see these reports in real time, daily.
4. Repeat these steps with your team.
Identify the KPIs each team member should be monitoring. These will be different from the KPIs for your overall business but should align with the plan/goals. KPIs help your team understand the definition of a great day’s work for them. Monitoring and reporting the KPIs regularly will help your team know if they’re on track.
Implementing KPIs into your business is a great way to get clear on what elements require focus to achieve goals and plans. Once set, it’s a matter of simply monitoring and tracking KPIs to stay on track, and, if performance is dropping, implement amendments quickly to get back on track.
And remember, the most successful businesses have accountability to make sure Step Three happens!
Speak to us today about how Kendons can assist with identifying metrics that matter for your business.