Business KPIs: Cheat Sheet for Busy Managers.
Why Measure at All?
As part of your introduction to business KPIs, you need to some idea about why you should bother to measure at all.
• To know where you are in your business, and how to improve it.
• To build a business case for an investment or a course of action.
• To figure out the impact on clients or customers.
• To improve objectivity, and reduce reliance on opinion and rumour.
• To establish accountability amongst teams or team members.
• To ensure people aren’t working at cross-purposes.
• To celebrate success.
Introduction to Business KPIs — Definitions
• A Strategy: Longer term scope or direction that differentiates you from your competitors. (How do you make money or if you aren’t in a profit business how you achieve your organizational “end”).
• Goal: Something specific you work towards to achieve your strategy. (What you’ll do to realize your strategy)
• Key Success Factors: Those critical areas (or key work activities) we must focus on in order to be successful (achieve our goals). Some generic KSFs are: Quality, Quantity, Cost, Time, Safety
• Performance Indicator: A measurement that tells you how you’re doing in working towards the achievement of a Key Success Factor: Result indicator: Measures outcomes or results OR Process indicator: Measure activities that lead to outcome or results
Introduction to Business KPIs: Good indicators
• Simple to understand and use
• Aligned with corporate strategies
• Promotes continuous improvement
• Controllable or significantly “influenceable”
• Examples of Good Performance Indicators: Absenteeism rate, Tons per hour, Time loss numbers, Overtime as a % of salary
The Business KPIs you choose must be within your sphere of control or your sphere of influence. You can measure some things that are in your sphere of concern, but they will not drive your business the way that Business KPIs in the other spheres will.
Introduction to Business KPIs: Bad Indicators
• Are too complex
• Are not specific enough
• Not connected to larger goals. Examples: Lousy production, Bad attitude, Bad safety, Good overtime control
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