Wednesday, July 15, 2015

Choosing Key Performance Indicators for Your Business

VisitBasis starts a series of articles devoted to key performance indicators for field team management. Since there is a need to understand well what is important in KPIs implementation, in this article we’ll briefly define what is a KPI, why use KPIs, how to choose the right KPIs for your organization, what are the key stages of KPIs implementation, and what are the key characteristics of an effective KPI.

What is a KPI?

A key performance indicator (KPI) is a metric, used to evaluate the success of an organization, a person, or of a particular activity in which it engages.

Why use KPIs?

KPIs allow managers to measure the success of organizations and individuals at achieving certain goals. On a global scale KPIs’ help to define business trends and make strategic data-driven decisions.

How to choose the right KPIs for your organization?

There are thousands of KPIs that vary from organization to organization. Choosing the right KPIs relies upon a clear understanding of what is important for your business. Mainly KPIs depend on business drivers and company’s goals. KPIs should reflect those aspects of organizational performance that are the most important for the success of the organization. By the way, KPIs are rarely new to the organization. The trick is to put into the right form the issues that are regularly discussed at corporate meetings and stand-ups.

What are the key stages of KPIs implementation?
The key stages of KPIs implementations include:
  • Defining requirements for the operating business process.
  • Deciding what exactly you want to measure.
  • Creating of KPIs.
  • Measuring of the results.
  • Comparison with set requirements.

What are the characteristics of an effective KPI?

There are plenty of studies to derive the comprehensive picture of effective KPIs, and even more articles, offering “Five/Seven/Ten Characteristics of Effective KPIs”. Still KPIs are most frequently defined in a way that is:
  • Meaningful – A KPI should be relevant to company’s goals and strategy; related to the defined targets; suitable for specific business needs; achievable and leading to action).
  • Understandable – A KPI should be defined, clear and easily understood by managers and employees.
  • Measurable – A KPI should be easy to quantify, measured frequently (daily or weekly), and comparable over time.
Understanding the nuances of KPIs’ implementation is vital for managers looking to optimize their organizational efficiency. KPIs can be useful for many aspects of team management, from measuring field reps’ performance to developing sales territories.

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