Whether you are an individual or a business, figuring out what success looks like can be difficult. There may be times when you feel like you are spinning your wheels, but you cannot figure out why. It might be the time to look at what indicators of success you are using for yourself or your business and set a course to attain them. KPI or Key Performance Indicators are a way of tracking your business successes and failures.
Most businesses set goals in the beginning, simple ones, such as ‘by year’s end we are going to have five new clients.’ But as you grow, goal setting gets put aside as you get lost in the day-to-day running of the business. Therefore, it is essential that as you gain success, you continue to move the bar forward and establish new goals to continue successful growth.
KPI’s can help you set goals and objectives for different parts of a business. The metrics assigned should all work together towards an overall goal of achievement for the company. For example, Financial KPIs might include clearing accounts receivable or getting account payables on track. Another KPI is controlling payroll costs, perhaps by limiting payroll to a certain percent of gross receipts. The bigger picture is the structure and organization of your financials. When you understand your numbers, it is easier to know what you need to do to grow a business financially.
Many in business use the phrase “What gets measured, gets done.” It is no different with KPI’s and personal growth or accomplishment. When you have set parameters for an employee with KPI, that employee will strive to hit the mark on those goals set. When your employee receives a reward for hitting those goals, they attain better results and gain personal satisfaction and company growth.
You can crudely describe KPIs like the carrot put in front of the horse. Aren’t we all trying to get that carrot, either as a business or a person? Working towards goals and accomplishments is the purpose of getting out of bed each and every morning.
Tailor individual KPIs in such a way that they dovetail with and support the business’s overall goals. For example, perhaps you have an overall KPI of increasing sales by 10% in the coming fiscal year. Based on individual performance and past experience, you estimate that Bob, one of your sales staff, needs to increase his sales by 13% to do his part in reaching this higher level of objective. Therefore, Bob’s KPI for this goal is a 13% sales increase by the end of the year. The key to a successful KPI is that it must be measurable. Saying we want to increase outreach to our clients is too vague. A better way to communicate this would be to say we want to improve client interactions, whether electronically or in person, by 32% in the coming year. Now you have something concrete towards which to work.
As a leader in your organization, you should also have your own personal KPIs to achieve your performance targets while your organization is achieving its goals. Some of these may be determined for you by your board or investors, but it is always good to have a few KPI’s that are for you alone. Maybe the goal is to complete a Master’s in Health Administration, or perhaps it is to improve employee morale by doing XYZ. However, it may not always be clear what your personal KPI should be. In situations like this, a professional coach or mentor may help by offering guidance and advice. Another time when you may want to consider using an experienced coach, you have achieved all of the goals you set out to complete and are looking for new challenges or opportunities to absorb your time and attention.
Using Key Performance Indicators for your business, your employees and your personal goals will help you stay focused and keep you on track for long-term growth and success. Do not allow yourself to get sidetracked; if you feel you are adrift, reach out to a professional coach who can help you get over the hump. All of us need outside help from time to time and recognizing that fact is the mark of a wise and mature leader, one who can get the job done!