How do you pick your KPIs?
Key performance indicators (KPIs) are needed to identify operational inefficiencies and risks, drive operational improvements, and exploit opportunities as they emerge. For an organization to succeed, KPIs are carefully chosen to create strategic competitive advantages and provide long-term value to the enterprise.
These six guidelines for wielding the power of KPIs will optimize your efforts:
- Quality over quantity: Managers might have a habit of adding KPIs as they provide data that is intriguing, but in reality, more is rarely better. Select the KPIs that have the greatest impact for the entire organization and make the most of them.
- Align your KPIs with your strategic objectives: Simply measuring performance isn’t enough. Of much greater value is measuring whether those performance metrics bring you closer to your goals and objectives, in a timely manner.
- Provide KPIs that are meaningful to all levels of the enterprise: For them to be of greatest value, people at all levels of your organization should be able to relate to the indicators you review. Use metrics that provide meaningful results to those who will see them.
- Validate your data: Since you’re relying on measurements to make key strategic decisions, be sure to validate that your measuring systems are repeatable and reproducible in order to provide insights that are that are reliable, significant and timely enough to base sound management decisions on them.
- Measure it only if you can control it: If you don’t have someone at the controls who is empowered to modify the variables that result in key performance outcomes, then what good is that KPI? What you measure must be controllable in order to obtain the strategic objectives you desire.
- Create a KPI-driven work culture. Be sure to educate and train your employees about how to work with them, learn from them, and be successful with them.
We hope this will help you create more relevant dashboards for your business.