Key performance indicators (KPIs)
Which areas of my business should management information (MI) focus on, how often should I report it and how do they relate to my key performance indicators (KPIs)?
KPIs are not just an activity owned by the board or directors – they should operate across the whole firm and are central to operational management. When widely adopted and understood, they are a powerful tool for managing organisational change, business growth and continuous improvement, allowing businesses to compare their performance against market benchmarks and competitors where available.
KPI trends also help spot potential issues and identify business opportunities and enable targets to be agreed at operational levels to help deliver wide strategic goals. Departmental KPIs can reflect customer satisfaction, sales volumes, repeat buying, profitability, quality control, staff absence or staff turnover. Each business’s KPIs will depend on the individual setup and markets, and as such, they should relate to specific strategic objectives, be clearly measurable and have set timeframes (following the SMART management acronym).
Balanced Scorecard approach
Explore the 'Balanced Scorecard' method of measuring performance
from Info Entrepreneurs
WHAT? An in-depth article that covers financial results, customer and stakeholder satisfaction, internal business processes, workforce learning, development and growth. The practices will help with regular performance management tracking.
WHEN? You want to establish ‘joined-up’ organisation-wide objectives and targets, reviewing performance measurement over time, reflecting changing internal and external factors.
WHY? The Balanced Scorecard helps ensure that businesses consider the operations of the whole firm in delivering strategy.
OTHER RESOURCES?
>> How to write SMART goals from Startups.co.uk
>> An overview of the Balanced Scorecard from Box Theory
>> Seven sector templates for a Balanced Scorecard from Clearpoint Strategy
>> A four-minute video intro the Balanced Scorecard from Intrafocus
SMART goals
How to set SMART goals for your business
from Startup Nation
WHAT? A management process and control for setting clear objectives that are widely understood
WHEN? Your business objectives are unclear in relation to outcome, timeframe, measurement or achievability
WHY? Objectives that are not precise mean different parties have a different view on key aspects of delivery, resulting in wasted resource and tension
OTHER RESOURCES?
>> How to set SMART goals from Bplans
>> What goals should your business set from Startup Donut
>> Guidance on setting SMART objectives and the importance of monitoring them from Clickup
Why SMART goal setting is crucial
Resource blurb
from Startups.
WHAT? An article that provides a mechanism for feedback and improvement to the core customer proposition relating to offer, quality, service and price
WHEN? You are starting a business and want to set goals and measure growth
WHY? Studies have shown that organizations or individuals that attempt to reach specific goals rather than vague ones have a much greater likelihood of accomplishing them
OTHER RESOURCES?
>> Guidance, video and templates on setting SMART marketing goals from CoSchedule
>> Setting customer, marketing and stakeholder satisfaction objectives from Salesforce
>> Five tips for business plan success from Virgin Start Up
Financial performance targets
Measure financial performance and set targets
from NI Business Info
WHAT? An explanation and examples of different SMART objectives relating to the same area of a service. Can help align objectives to a business’s strengths and sources of differentiation.
WHEN? You want to examine internal processes to shine a light on those activities the business must excel at to meet and exceed customer expectations.
WHY? A small number of individual operational issues that are underperforming can collectively cause much greater damage to customer service. Defining operational performance metrics helps deepen understanding of production, leading to opportunities for improvement.
OTHER RESOURCES?
>> SMART goal setting examples from Love to Know
>> How to set KPIs from NI Business Info
>> Assess business performance through KPIs from NI Business Info
Financial goals
Generate financial goals
from Good Financial Cents
WHAT? An article evaluating financial measures, including turnover, turnover growth, turnover concentration, gross profit margin, investment levels in research and development, staff costs as a percentage of turnover, net profit margin, cashflow and debt ratios.
WHEN? You want to identify which products, services or customer segments are most profitable
WHY? When you understand your cost base, key metrics and margins, you are better able to deploy its resources and serve customer profitably and sustainably
OTHER RESOURCES?
>> Examples of financial goals from BizFluent
HR performance management
Manage staff learning, development and performance
from ACAS
WHAT? An examination of day-to-day efficiency improvements through skills and knowledge development
WHEN? You have a high staff turnover resulting from lack of development or productivity is flat or falling
WHY? By tracking investment in people, you are better placed for innovation, self-improvement and long-term development
OTHER RESOURCES?
>> A guide on setting HR SMART goals from University of California
>> See our Talent Development and Performance Management section
Goal setting
Avoid five common mistakes with goal setting
from Primeast Forward Focus
WHAT? An article and video on how to use a SMART goal formula to avoid a failure to set proper goals
WHEN? You've recognised the importance of goals for your organisation but you've never implemented them in a structured way
WHY? The outcome of failing to set goals is failure
