KPIs are measurable metrics used to assess performance and success in achieving specific objectives or goals. They help track progress and drive data-driven decisions. - ChatGPT
It's very easy to get caught up in all the possible KPIs out there. There's Financial,
Customer, Operational, Sales and Marketing, Employee Performance, and many more types. But if you've never tracked them before, which ones will truly benefit your company?
Follow this process to get you started:
Get buy-in and ownership. You are likely not the one having to do the work to reach whatever KPI you will set. Ensure that the people who will are part of this conversation and are keen on making it happen.
Locate your company's short and long-term goals. Don't have any? You've got some work to do. KPIs will only work if they are working in step with your company goals and vision.
Identify your Critical Success Factors. Choose 2-3 elements within each goal that will truly demonstrate you have achieved it.
Design a KPI for each Critical Success Factor. A KPI has two main components: a WHAT and a HOW. For the WHAT, try to get as specific as you can. Try going at least 1-2 levels further than your initial ask. Want to increase Revenue? In what region? For what product? This will help you focus your efforts and not spread your resources too thin. For the HOW, try using words like... Average, Percentage, Total, Number, Rate, Ratio. This will force you to quantify your desired outcome and make it measurable.
Check your data. Check that you have a source of reliable data that gives you the precise information required to measure your list of KPIs. If not, you need to set up that source before you commit to anything.
Choose which KPIs you will pursue. Too many too soon will overwhelm you and your team. Choose around 5-10 KPIs to start. Ensure an even distribution by type, department, and motivation (working towards short versus long term goals). Check that every person working with you has a KPI. Everyone wants to feel they are contributing to the company's priorities. The rest of the list is a good starting point for next time.
Define a timeframe. When you're just dipping your toes into KPIs, it's best to keep the same timeframe for all your KPIs.
Set your targets. Choose a number, but not just any number. Consider how much time you have to achieve it, what your track record has been on this to date, and how many resources you have to allocate to achieving this target. You can also find inspiration in industry standards, similar companies in your industry, and other industries. For a sanity check, try dividing your target over the time you have to achieve it and see if you think you can fund that (with people's time, budget, etc.).
Communicate the KPIs. Everyone who has a way to contribute to or hinder the progress towards this goal needs to be made aware of this goal. Yes, that means a little bit of change management. Think about how you will communicate it, who needs to know about it, how it will change their day-to-day life, and why they should participate.
Measure and report. Whether it's you or someone else, ensure someone takes responsibility for continuously measuring and reporting on this KPI. You don't need fancy software to do this. Google Sheets or Excel will do the job.
Communicate the progress. If you set a target, and you ask people to work towards it, it's important to let them know how they're doing.
Tweak. You will most likely find that you underestimated or overestimated your ability to hit targets, or had some unexpected positive or negative events affect your ability to focus on particular KPIs. That is normal and expected. Adjust, communicate clearly, and keep going. Sometimes, it's not so much the target as the quality of the journey towards it. The target may be clarified with time.
Still not sure? You know where to find us. We can help with all or some of the steps in this process. We have additional templates and tools to get you there!
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