Key Performance Indicators (KPIs) are de rigueur these days, and that is a good thing for business. After all, it is hard to accurately plan for success when you are guessing at every turn. While small and large businesses alike are establishing KPIs, there is one thing that is not so de rigueur and that is establishing KPIs that are appropriate, objective, measurable and actionable! Yet, without those important considerations, KPIs aren’t worth the paper they are printed on – or the computer screen they are displayed on!
Appropriate Metrics: Let’s say that you own a company called, ‘Widgets Plus’ and that company manufactures (what else?) widgets. Among the factors that will affect business success: the quality and dependability of the widgets, competitive pricing of the widgets, supplying the right variety of widget sizes, and the timely supply of widgets to your customers. In order to establish appropriate metrics, the management team must focus on the key components of success rather than measuring the number of pens the staff used in the month of August or the average shipping costs for technical manuals. Of course, Widgets Plus cares about its expenses and it is in their best interests to control those expenses, but key metrics must focus on the things that are critical to business success, sales, corporate reputation, competitive positioning and product or service sales.