Are you struggling with implementing KPIs (Key Performance Indicators) in your business or looking to implement them for the first time? You’re in the right place. In this blog post, we will guide you on using KPIs effectively to identify performance issues, make positive changes, and drive your business forward.
As a business owner or manager, not using real data to help with decision-making increases the risk of making poor choices. For example, hiring more staff when it feels busy without examining if there are other performance issues. Such decisions can lead to a bloated team that drains your resources.
The Purpose of KPIs
KPIs measure how effectively a goal is being achieved by comparing where you are to where you want to be. They provide objective figures, free from personal biases, feelings, or opinions. KPIs can also motivate your team, providing a target to work towards and appealing to goal-driven team members.
Where KPIs Fit Within Your Business
KPIs are part of a performance evaluation system that includes strategy, goals, and plans. Strategy refers to the long-term (3-5 years) direction of the business, including markets to target and competitive advantages. Goals are short-term (3-12 months) objectives that should cascade from top to bottom throughout the business. Plans are the actions taken to achieve those goals. KPIs sit at the bottom, providing an objective measure of how well those plans are working to achieve the goals and strategy.
Closing the Performance Gap with KPIs
To close performance gaps identified by KPIs, use this simple three-step framework:
- Measure and Identify: Measure the performance gap and its causes, which could be staff, inefficient systems, wrong suppliers, or wrong customers.
- Make Plans: Create plans to close the performance gap by adjusting sales, marketing direction, suppliers, or providing more training.
- Act: Implement change, which is the most important step. Commit to making actions and getting your team on board.
By cycling through these steps several times, you should see an increase in performance.
Take Action Today
Now that you know the purpose of KPIs, where they fit within the performance evaluation system, and how to use the three-step cycle to close performance gaps, you should be in a strong position in your business.
If you need help identifying performance issues, implementing change, and driving your business forward, book a quick 15-minute call with our team. We’ll discuss your business’s current situation, help you identify financial goals, and provide tips on how to get started. Don’t wait, take action today!
