KPI’s / Business Metrics
KPI’s or BM’s measure how your company is performing or not. Any business process can be measurable and the measure used needs to impactive, informative, relevant, accurate & timely.
We operate in a world of saturated with data, KPI’s and all manner of mgt. information reports. How many of us feel or have felt swamped in Data & information? How many of us have thought why? How many of us just see targets after targets after targets with little or no action?
Thus, it is important for any organisation to develop a relevant & meaningful set of KPI’s / BM’s.
In my experience from Blue Chip organisations through to Local SME’s, KPI’s / BM’s can essentially be broken down into 5 core categories;
- Financial Performance
- Operational Performance
- Process Quality
- Customer Service / Satisfaction
- Employee Resources
- Financial Performance – Money Matters to any organisation, from cash flow to EBITDA to asset valuation and so on. BM’s / KPI’s often used here are; sales, sales growth, net / gross profit margin and cash flow.
- Operational Performance – This is true for any business, all businesses will carry out some form of operation, manufacturing, selling, installation etc. BM’s / KPI’s used here are; productivity, resource utilisation, costs per unit of output & so on.
- Process Quality – whether it is a product or a service you provide, customers, internal & external will expect a certain level of quality & service. BM’s / KPI’s commonly used here range from reject rates, waste, RFT, complaints per 000’s, customer service, audit results etc.
- Customer Service / Satisfaction – without customers we cannot function, without continued custom we cannot function. It is therefore wise measure how well you are satisfying your customer’s demands. Common BM’s / KPI’s are customer service level’s, customer retention levels, customer complaints, credits issued, invoice queries etc. Some customers will also measure you & provide feedback, a useful metric, whilst you may think you are great, your customer base may not.
- Employee Resources – Arguably any organisation’s greatest asset is its people. We need to understand how efficient, effective they are as well as their wellbeing. BM’s / KPI’s here could include; staff turnover / retention, employee survey results, absence levels, disciplinary levels, etc. If you do employee surveys through such systems as survey Monkey, it is imperative that questions are relevant, measurable and confidential.
In summary, the big considerations for any organisation are;
Which KPI’s are the most important ones? Needs Vs. Wants
Who are they targeted at? Who sees them? Who is responsible for them?
Is the KPI Sustainable?
Do they drive business change / improvement / Action?
How often & who reviews the outputs
Proper consideration & implementation will ensure that any KPI / Metric system does what is needs to – to provide data / information from which you can effectively measure your performance as well as driving necessary actions where applicable in a timely fashion.