In order for a business to grow, and therefore succeed, the business must produce measurable results. That is where key performance indicators, also known as KPI’s, come into play. A KPI is a quantifiable measure that can be used to determine how well company goals are being met.
Why do KPI’s matter?
Key performance indicators are critical to measuring and understanding the successes and failures in your company. They receive important information, measure targets and encourage accountability within your company. If your company is not using KPI’s but your competitor is, be prepared for them to see more success than your company.
Measure Targets
Key performance indicators measure targets on an ongoing basis. For instance, if your company has a goal of retaining ninety-five percent of clients per month, this would be a key performance indicator that you can track monthly. If your team is consistently not meeting the goal, you can reassess the goal and the team’s efforts. The KPI is the measurement of how close or far your team is from meeting the goal.
Receive Important Information
Key performance indicators give companies the ability to receive important information in real time. This is especially helpful for extremely competitive fields. KPI’s can be tracked and used as a way to know how close or far behind you are from competitors. The real-time data allows business leaders to make systematic adjustments so the company is not left making frantic changes at the end of the month.
Encourages Accountability
KPI’s are extremely useful in encouraging accountability among the team. Typically, KPI’s are updated live and everyone is able to view them. This automatically creates a layer of accountability and transparency. In addition, key performance indicators provide accountability when it comes to providing reviews, feedback and employee performance.
When you keep a consistent measurement of something, it tends to improve. Key performance indicators are critical to the success of a business. Not only do they provide a way to accurately measure targets, they also receive important information and encourage accountability. Without KPI’s, a business cannot accurately measure their successes and failures. Read next month’s blog for more business tips and insights.