Optimising business performance

by Paul Sparkes 21. February 2013 15:12

A proactive and agile business will always employ performance indicators to measure, evaluate and optimise success. It is relatively easy to compile a set of objectives and goals that are important to your organisation, but there are some simple steps to consider when deciding which KPIs are right for your business;

1. Firstly, the KPI must reflect organisational goals. It may be the case that your organisation adopts several sets of KPIs, each set relevant to individual departments. It is perfectly acceptable for each team to strive towards a personal set of goals, but the organisation should set company-wide KPIs, applicable to the overall targets of the organisation.  KPIs should take into account the strategic objectives of the organisation and be integrated into all business plans.

2. Keep the number of KPIs to a minimum – say a maximum of 5 company-wide performance indicators and then a sub-set of 3-4 for each department. 

3. Share and communicate KPIs throughout the business. Whether this is on the company intranet, on wall displays or in company briefings – ensure each staff member understands and comprehends their contribution in achieving each goal. Performance indicators will also enable management to share specific, tracked information with shareholders and board members. 

4. The KPIs must not be generalised.  For example, ‘to achieve more customers’ or ‘to be the most popular company’ is not a good example of an effective KPI. Each KPI should have a specific meaning that is important, or critical, to your business success. The selection of more specific KPIs enables the organisation to be more focused and results driven.

5. The KPI must be achievable. There is no point setting an objective that your organisation has no chance of achieving. This will be demotivating for the team and a worthless indicator.

6. The KPI must be quantifiable. If you don’t have some kind of mechanism to accurately measure it, then it will hold little value. Using the example mentioned previously, ‘to be the most popular organisation’ is a worthless measure as there is no accurate way of proving this is true. An example of a good measure would be; to increase our customer base by 10% within 12 months. This is not only measurable but hopefully also achievable, depending on market conditions.  Many things will be measurable but only those that are valuable should be used as performance indicators. 

7.To avoid losing focus, all KPIs should have a timeline, with regular integrated review periods to assess progress, and the possibility to implement modifications to ensure the performance indicator is met. By effectively defining, measuring and assessing KPIs, organisations will have a clear and concise view of what is important and it will provide the tools and vision to optimise and build on profitable streams of business.

By effectively defining, measuring and assessing KPIs, organisations will have a clear and concise view of what is important and it will provide the tools and vision to optimise and build on profitable streams of business. 

Download the Free Whitepaper 'Optimising Performance Potential' in full here

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