When writing or developing a KPI, you need to consider carefully how that KPI relates to a specific business outcome or objective.
They need to be customized to your business situation and should be developed to help you achieve your goals.
Each team or department will use different types of KPI to measure success, based on their specific business goals and targets
It is important to measure and monitor performance, but vital to ensure you are measuring the right things. It will cost time and money to measure and monitor the KPIs you choose. Some are very difficult to measure and may not be worth the effort. You want to specify easily measurable, and achievable targets that move the business in the right direction.
Here’s some guidelines; –
- Write a clear objective for your KPI, think through what its achievement will mean to the company, how it can be achieved, and what behavours will need to be changed to achieve them.
- Share your proposed KPIs with peers, colleagues, managers. Discuss the above point with them.
- Make sure the KPI is achievable, remember SMART
Specific Measurable Achievable Relevant Timebound
- Review the KPI on a regular basis, and the progress being made against it. If possible share the information with those targeted and discuss what needs to be done to achieve it, and how it can be done. For example, “we are £100,000 short of our sales target, there are five sales people. They each need to pick up £20,000 of the slack.”
- Evolve your KPIs to fit the changing needs of the business
- Update your KPIs objectives as needed
Monitoring and Reporting on KPIs
Reporting on KPIs will take effort and resources, so will cost money. The benefit must be weighed against the costs, so it is important to ensure at the outset they will be relatively easy to monitor.
You can get or develop software that will manage and report on KPIs for you.
Data must be collected, analysed and reported. All of this must be accurate and as near to real-time as possible.
It is very useful to report and discuss the progress achieved, as it helps people understand how they are doing and alter their behaviours and business decisions to drive forward to their target. This will allow teams to see where they are against the target, what still needs to be done to achieve target, decide on action, and implement the action.
Types of KPIs
Remember that you need to consider who will be using the data to make business decisions, and that the metrics you want to track will depend on the different roles involved.
Executives need an overview for every department, while managers need metrics that helps them monitor, understand and improve daily performance. Operational staff need information that will help them to be able to improve their own performance.