Running a business has become more competitive than ever before. Clients expect better and more professional services for less money. The competition is fierce and operational expenses are high. Now more than ever, good leadership skills may draw the line between failure and success.
For your business to gain the market advantage you desire, employee productivity, and organizational effectiveness are essential. No matter how well-structured your organizational operation is, without productive employees your business will not succeed, and vice versa.
The question now is; how do you actually measure organizational effectiveness and business performance? How can you tell if your business is spending valuable time and resources on activities that are aligned to the company’s goals? How can you track business progress?
There is something called Key Performance Indicators or KPI. This is a measurement commonly used by businesses and organizations to measure and evaluate its success or the success of a specific project or activity. KPIs aren’t just a compilation of accolades and kudos a team receives while doing their work, these are quantifiable metrics. Setting KPIs will enable the different levels of an organization to be aligned through clearly defined targets, allowing a more cohesive and seamless business operation. Learning and maximizing KPIs will reflect on your good leadership skills within the organization.
Here are a few more guidelines about KPIs:
- KPIs are a set of values organizations use to measure their productivity. KPIs depend on your business type.
A marketing business may have the following KPIs:
- New customers acquired
- Status of existing customers
- Customer attrition
- Demographic analyses
A manufacturing business may have the following KPIs:
- Employee productivity
- Customer satisfaction
- Stock performance
- Budget performance
- Cycle time
- Rejection rate
- KPIs must be aligned with your business’ goals and objectives.
- KPIs must be easy to understand, simple, and measurable. It should also be set within a specific timeframe, i.e. a month, year or quarterly.
- Bigger organizations develop KPIs depending on specific goals of departments and divisions that perform varied functions. The finance department’s KPIs should be different from that of the operations or sales department.
With your KPIs in place, this will serve to guide everyone in the organization to work toward a united goal. Each department will work under clearly defined objectives and eliminate non-essential activities that drain valuable time and energy.
Take note that creating inefficient KPIs can drive counter productivity among your organization. Setting targets not related the department or project’s real work isn’t cost efficient, and it will just confuse employees. By year-end you will be surprised to see very little progress. Every time your staff loses focus of their roles and functions, use your good leadership skills, gather them, and check back on the departmental and organizational KPIs, if the KPIs aren’t aligned with long-term goals, then it’s time to change them.
© 2013 Incedo Group, LLC