How to develop meaningful Key Performance Indicators for your business
Key Performance Indicators (KPIs) measure aspects of your business performance that are most critical for your company’s success.
To develop meaningful KPIs you must develop clear objectives and KPIs that support your company strategy.
Once KPIs have been defined, they need to be presented in a way that will allow quick and easy interpretation.
KPIs should have targets and provide evidence that objectives are being met.
The KPI information needs to be acted upon in such a way that it will move your organisation closer to achieving its objectives and ultimately your strategy.
How to develop meaningful KPIs:
- Create objectives for each area of the business for example improve sales productivity.
- Describe results for example reduce the time it takes to convert a qualified lead into a sale.
- Identify measures for example the average time taken to convert all qualified leads into sales in a given period and ensure that there is an ‘owner’ of each measure.
- Define thresholds – a performance measure is meaningless unless it can be compared to something. This could be a target based on previous performance or notional future performance.
- Upload structure/ data – build a score card structure entering objectives and related performance measures. Actual data will then be added on a regular basis.
- Interpret results - this incorporates creating meaningful dashboards and reports and secondly interpreting the results which could include developing charts.
- Take action – any performance measure that shows that an objective is moving in the wrong direction may need to have an action associated with it to remedy the situation for example a task, a project, budget change or simply to remove the objective. It’s important at this stage to consider if strategic initiatives should be created.
Contact Deirdre McDermott Audit Director OSK for further information on KPIs for your business and for information on our tax and accounting services or call 01 439 4360.
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