Use Your Key Performance Indicators to Help Your Business Strategy
From a break-even analysis to balanced scorecards, many tools exist to measure company growth and success. Key performance indicators are measurable values that effectively track and demonstrate achievement of company goals and objectives. Organizations use KPIs at multiple levels to help leaders and their teams measure the effectiveness of various functions and processes. KPIs are as valuable as the actions and questions they inspire.
Are Your KPIs Inspiring Actions and Questions?
KPIs are meant to answer questions and inspire action. Instead, they usually create more questions than answers. It’s important for leaders to embrace these questions and use to propel towards success.
Types of key performance indicators
Finding the right metrics for your team and organization is tricky. KPIs measure a wide-variety of metrics with customer, employee, financial, and process metrics being the most important.
Customer metrics center around knowing and understanding your customers. These metrics measure customer lifetime value, acquisition cost, and the number of customers. Knowing your customer base helps increase customer satisfaction and retention.
Employee metrics help leaders understand and retain satisfied team members. Employee turnover rate, employee satisfaction, and internal promotions versus new hires all measure the people in your organization. These metrics lead to more satisfied and productive employees.
Financial metrics measure profit, costs, and sales. These metrics help leaders better understand monetary growth and success. Understanding financial metrics helps reduce and manage costs and maximize profit.
Process metrics measure the work taking place in your organization. Efficiency measures, percentage of product defects, and customer support reports all support organizational process.
While all KPI measurements are important, the employee-centric metrics are the foundation of organizational success. Success begins with satisfied and productive employees. Customers, finances, and process can’t be measured without successful employee measurements.
Key performance indicators employee evaluation
Employee KPIs should be specific and measurable. The true measures of success answer: what has to be done? What will the outcome be? Employees should always know what is expected of them to avoid ambiguity and confusion.
KPIs serve as motivators for organizations, with employee KPIs motivate your team to work harder. Unattainable KPIs create unnecessary stress for team. Avoid over stressing and discouraging employees with KPIs with employee feedback to understand how they feel.
Understanding employee KPIs
Successful employee KPIs lead to success in finance, customer satisfaction, and the overall business process.
For example, think of the sales pipeline as a process with three measurable points: lead generation, the proposal stage, and closing. Cycle starts to go up thanks to new salespeople. This new trend reflects an increase in sales when sales were previously declining.
The new trend in this story tells us of the positive impact is due to better sales habits from the new salespeople. The new questions now being asked are:
- What old habits were negatively affecting the sales cycle?
- What are the new habits?
- How can we use this information to better train future hires?
These questions will help leaders better train future employees, while simultaneously eliminating ineffective habits.
Measure Future Success with Assured Strategy
KPIs are commonly measured once a month. We recommend measuring KPIs once a week, resulting in 52 data points in one year, instead of 12. This new behavior gives you the power to create more powerful questions based on KPIs. Learn more about behavioral coaching to implement successful habits in your organization.
