Key performance indicators (KPIs) are often described as the business vital signs. When the KPIs look good, everything is healthy. When the KPIs look bad, call the mortuary cosmetologist. Jermaine Haughton discusses the value of KPIs in an article for the Chartered Management Institute.
The Key to It All
One key feature of KPIs is that you can build around them. They can be scaled conceptually or various mechanisms can be built to support them. This is true of both organizational KPIs and project KPIs. In an act of either oversight or ignorance, 49 percent of small and medium-sized businesses do not have KPIs, according to Geckoboard research. Among the businesses that do use KPIs, 31 percent do not reassess the KPIs they choose later.
The problem here is that, without KPIs, you cannot conclusively say how well the business is doing. And without reassessing KPIs, you cannot be sure they are really measuring the aspects of the business that signify its health anymore. Fortunately, 24 percent businesses in Geckoboard’s research take KPIs seriously and monitor them in real time.
Paul Yarwood, CEO of the company Hubble, uses a car analogy to explain how what constitutes a KPI can change over time:
The GPS that is telling you your estimated time of arrival is a key indicator, because it tells you how you are doing right now. But you can ignore the data coming in from the odometer, which tells you how many miles the car has already traveled (but that would become a key indicator if you were scheduling a service). If you see a traffic camera ahead, suddenly the data from the speedometer becomes key. If you see a sign saying “last fuel for 100 miles,” then the fuel gauge is suddenly key – while a flashing blue light in the rear-view mirror will change all of your priorities. Such KPIs are vital to help businesses, and especially CFOs, optimise performance.
It is always a good time to get started with KPIs, in whatever capacity most applies to your current situation. You can view the original article here: http://www.managers.org.uk/insights/news/2016/august/your-kpis-do-you-know-them-do-you-track-them-do-you-care