Key Performance Indicators (KPI) are used by growing and competitive businesses to measure their business performance. It helps them understand how their business is faring and acts as a compass that points to whether they are taking the right path towards their goals or not.
There are seven qualities a good Key Performer Indicator must possess to be effective:
- Relevant
One of the characteristics of a real key performer indicator is how relevant they are. The right decision makers should be in control of carrying out precise KPIs.
For example; a KPI that asks, “How do we get these products to our customers” should be the work of the Logistics Manager.
When you give the right responsibility to the relevant manager, the business will thrive.
- Timely
A good KPI is time efficient, in that; their results are examined in an appropriate time frame and report on a proper timeline.
While delivering reports too frequently can reduce the value of the data, occasional reports would make it difficult to identify trends. It is best to consider the accuracy, urgency, cost and sensitivity of the projected timeline, to avoid both situations.
Also, make sure they act on the results of the reports in a timely approach.
- Achievable
Set the Key performer indicators with realistic goals that can be met by the employees because unachievable goals kill employee motivation.
It is advisable to start by setting small, easily achievable goals instead of the major impossible ones.
With small goals and closer deadlines, your business can achieve its aspired growth. Instead of challenging goals, that overwhelms the employee.
- Simple
A key performer indicator should be both easily understood and measured. A useful KPI should prompt solutions not more questions. It should be simple enough for each staff member involved in the goal to read
If the goal is clear, the workers can make provide decisions to control the result.
- Measurable
A KPI must be able to analyze both negative and positive variations from a goal, in other to do this it must be measurable.
An active key performance indicator avoids broad questions. And are based on solid, focused goals such as; customer satisfaction, marketing or sales.
- Visible
It is easy for a company to grow when its employees are conscious and occupied with its goals. Although not all parts of the company would be active in effecting a particular KPI visibility of the goal will boost employee commitment.
- Aligned
KPIs should move from the strategic aims of a company to the daily operations of the employees affecting them.
Always make sure the key performer indicators are always aiding the goals of the company. Because organization focused on customer service will have a central focus on retention of customers than acquisition.
