There is so much you can measure these days that deciding what to measure can be tough. Often businesses measure nothing as they’re simply drowning in data.
At this point most business strategists suggest going back-to-basics by defining Key Performance Indicators (KPIs) for your business. KPIs are a metric which indicates how a business or team is performing against its goals.
Ultimately, they provide focus and avoid metric overload. The key thing is they need to come from the top of the business to unite focus across a whole business towards a common goal.
But what to measure? Choosing your company or team KPIs can be a tricky business, especially when starting from a blank page with so much to choose from. Here are the key steps we went through as a business to get started:
(1) Ask yourself: “What are the most important things my main stakeholders expect of me?”
If you haven’t already, sit down and match your overall business objectives and strategy back to a handful of top-line business KPIs.
A good way of looking at this is asking yourself, “why do I exist?” – think of your main stakeholders, typically your clients and your investors. Then ask what are the one or two things that they expect from you?
For example, your shareholders might expect you to grow revenue and/or margin, while your clients expect you to solve their questions quickly and to a satisfactory level or build a product which makes their life easier.
If you can, keep these KPIs to a small focused group of one per stakeholder group then you will retain even greater focus. Ben Yoskovitz, author of Lean Analytics, even endorses focusing on the one KPI that matters in our video interview.
Having one KPI that’s important for the whole business to work towards can unite a whole business to have an individual focus.
(2) Waterfall to departmental KPIs
Like most elements of business strategy, KPIs should start at the top and cascade through the business – very much like a waterfall.
Once the overall company KPIs are set departmental KPIs can be set which feed into the overall goals of the business.
Whilst the whole business needs KPIs that enable them to focus on a common goal, each department or team within a business also requires KPIs that unite them around a goal and allow departmental team members to see the impact of their work on the overall business KPI. That’s key.
These departmental or team indicators need to feed into the overall business reaching their KPIs. For example, if the business focus is on growing revenue then your sales team need to grow meetings and marketing need to grow leads. That’s a simplistic example, but I think it illustrates the point.
Continue reading on the next page for two remaining tips that can help you shape your performance
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