KPI’s are all about improving things by measuring them.
Once I stopped personal measurements on a production line and replaced them with end of day KPI’s for everyone.
Things fell in a heap until I substituted daily KPI’s with hourly ones after which production went up right away.
Find out what’s important to the people where you want productivity to improve and measure that.
A courier might want to know how many parcels he/she can deliver in a day. Where as an CEO must measure what he/she has control over.
KPI So what does kpi stand for simply a Key Performance Indicator.
KPI’s are used to measure different business objectives. The use of a KPI in specific areas of your business will help you determine the success or not of that particular facet of your business.
As Peter Drucker author of 39 books on business management is quoted as saying “If you can’t measure it, you can’t improve it.”
A KPI Example
- Do you know how many new website visitors you had in the last month?
- How many of them turned into new clients/customers?
- What is the level of customer satisfaction today compared to a year ago
- What is the lifetime value of your clients/customers?
These are just some of the things you need to know to grow your business
Key Performance Indicators KPIs are indicators of just where you are at by highlighting areas where you are performing poorly.
So armed with that knowledge you can focus on what needs improving and fine tune that which is working well
Some Key Performance Indicators you could use in a Retail Business would include:
Retail sell-through rate
Sales per square foot/meter
Average $ spend
KPIs Are Indicators, Not Action
KPIs provide a guide as to how you are performing in certain areas.
Positive KPI’s point to actions worth repeating . Bad KPI’s highlight on what must change. It is up to the team members to take action
Your businesses KPI’s will be specific to you. Design them to your business aims, as they are fundamental to your growth
Quick 7 Step How to Develop Your Own KPI’s
- Write a clear aim for your KPI – it needs to be closely connected with a key business target
- Share your KPI with your team – Inform the people responsible with carrying out your vision for the business so they know what is required to achieve your goals
- Review the KPI’s on a regular basis – Analyzing your KPIs regularly is essential for the maintenance and improvements
- Make sure the KPI is actionable and achievable
- Evolve your KPI’s to suit the ever-changing requirements of the business – KPI’s that never get modified can rapidly become useless
- Check to see that the KPI is possible – An objective that’s too high is at risk of your team giving up before they get going
- Update your KPI’s goals as needed – KPIs aren’t motionless. They always need to develop, modify and alter as required
A Word of Warning
KPIs are powerful tools if they are used as indicators as to how you are performing. However, if the KPIs become the be all and end all goal, then they can turn un-helpful and can be harmful information in the pursuit of improved performance