You can hire qualified employees who end up ineffective or inefficient if you fail to give them targets they would need to achieve. That takes us to the following fundamental question. What are Key Performance Indicators (KPIs)?
A performance indicator or key performance indicator is a type of performance measurement. KPIs evaluate the success of an organization in a particular activity it engages in. For your company to meet all relevant business goals, you have to set up KPIs. If you don’t have KPIs, you can use the ones below to guide your business.
Quantitative indicators are perfect when you’d like to use straight-forward KPIs. When you’re only interested in numbers, this would be ideal, and two types of quantitative indicators would be relevant to your business. These are known as continuous and discrete. Discrete variables represent counts, for example, the number of customer complaints, while continuous variables represent measurable amounts (e.g. water volume or weight).
The opposite of quantitative is qualitative, which means that numbers do not measure them. If you choose to use this form of indicator, then keep in mind that you need to create survey data that will include questions focused on feedback, then measurements would be based on the respondent’s remarks.
This indicator is ideal when you want to measure the effectiveness of the business decisions you’ve made. A lagging indicator measures current production and performance. It helps to evaluate and determine whether your business decisions facilitated the desired outcome. An excellent example of lagging indicators would be looking at how many people attended an event or how much product was produced.
If your business is all about tracking resource efficiency, especially in large projects, this would be the best KPI to use. This type of KPI is needed when you need to measure resources that are used, particularly during a business process. Some of the things you may have to measure include staff time, cash on hand or equipment.
As the name suggests, this indicator is used to assess the process and efficiency of a business. For example, this KPI would work perfectly for a company with a customer care department that uses support tickets. When analysing the process, they would need to pay attention to how tickets are being resolved and if it’s happening fast enough.
To summarise, before making a decision, do your homework on the different KPIs, just as you would for everything else. Before you adopt a strategy or a combination of several KPIs, weigh the benefits and drawbacks of each approach to determine which would work best for your business.
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