Key Performance Indicators (KPIs) play an important role in any business that values information and measuring progress.
KPIs can be used to track the performance and achievements of individuals, small teams, larger departments and the organisation as a whole. However, setting effective KPIs involves more than just laying down goals for the future and crossing your fingers.
Here are three tips for ensuring your KPIs are optimised to deliver true benefits to your organisation.
KPIs should not be static
Many organisations set a single KPI for a given time period, and then only choose to update that KPI when the goal has been reached. They lurch along from KPI to KPI without thought for previous trends or progress.
To be truly effective, you need to be able to track your KPIs over an extended period of time in order to view a complete picture of the organisation's performance.
The best modern strategy mapping solutions are designed with this functionality in mind, and can allow you to chart a history of KPIs within your organisation. Armed with this information, your organisation will be able to make real progress towards wider strategic goals.
Make them S.M.A.R.T.
Any goals you set for your business – including your KPIs – should be specific, measurable, achievable, reachable, and timely (S.M.A.R.T.).
Without these five components, your KPIs will either be impossible to reach or worthless in the long run. Work with key decision makers and members from within the organisation to ensure that every stakeholder feels the KPIs you have set are suitably S.M.A.R.T.
Don't go overboard
Too few KPIs will make it difficult for your organisation to properly measure critical areas of performance. However, too many will hamper transparency.
According to PWC's Guide to Key Performance Indicators white paper, it is impossible to specify exactly how many KPIs an organisation should implement, as each will have different requirements based on its structure and strategy.
However, approximately four to 10 different KPIs for each area of focus should be enough to give decision makers a strong point of focus.