What are KPIs?
KPIs or Key performance indicators may be defined as an analytical approach to evaluate your company’s performance for achieving business goals. By using KPIs, organizations may appraise business success in achieving targets and also keep their focus on the performance output of business along with an eye on the working of various departments like HR, sales, and marketing.
In other words, the Key Performance Indicator is an approach to calculate the success of a business house and its progression in fulfilling its goals.
Most corporates and the higher management of an organization use key performance indicators to find out and study the features required for a successful business. Constructive key performance indicators always concentrate on the functions and processes related to the business of the organization that are beneficial in achieving goals and targets too.
KPIs for all business setups are different according to the structure and nature of the organizations and their business preferences. In other words, we can say that the key performance indicators for a new start-up business would be entirely different from a public limited company and a private limited company. Hence KPIs differ from organization to organization based on business priorities.
Interestingly the senior managers holding different positions in the different departments of an organization have different ideologies for KPIs. As far as different key performance indicators are concerned one manager might prioritize profitability, another one sales, a third one marketing and customer satisfaction, and so on. In a successful organization, a blend of different KPIs is used for better performance and goal achievement.
Why Key Performance Indicators?
- It is an analytical approach that guides senior managers and management as to what changes in the business process can improve performance for achieving desired goals.
- Corporates can judge the actual status of their business by using KPIs.
- If properly used, the Key Performance indicators can warn the user about possible future business problems and guide them to protect their business investments.
- KPIs application motivates and involves employees to improve the performance of the business process which certainly results in the success of the business.
How to select the appropriate KPI?
The selection of correct and appropriate KPI is very important. This will involve and motivate all the employees for better performance to fulfill their organization’s goal. On the other hand, the selection of incorrect and inappropriate KPIs will result in poor performance and a fall in business achievements. While choosing the right KPI, the following points should be kept in mind:
- Always measure the correct articles to fetch the business goals and objectives and to also improve the efficiency of your team members.
- Evaluate and analyze business processes, organization’s ideology, and overall business goals.
- The mindset of every individual, corporate and senior manager is different according to the nature of the business and its goals.
KPIs: What should be measured?
Nowadays in the global business market, the accurate calculation or measurement of business performance is very simple and fast. An intelligent Data analyst always concentrates on an organization’s key performance indicators and their tracking the right way. The most important point is to decide which things should be measured. Some simple guidelines for your reference:
- By extracting the requirements of each department, detach all the problem points one by one.
- Recognize and concentrate on your main organizational goals.
- Just keep in mind which factors can improve the process and employee efficiency for achieving business goals.
- As a data analyst, go deep into analyzing metrics.
- After selecting decisive KPIs, try to split them. Consider the best 8 to 10 KPIs to achieve a company’s goal into an accurate metric.
- The sole purpose of key performance indicators is to obtain targets and set goals for quantifiable amelioration.
- Spare some quality time and choose the most appropriate KPI rather than opting for mix and match.
- With the help of selected 8 to 10 KPIs, analyze the data and start data design.
- Examine data sources, guess the intricacy of data design, and develop the correct BI tools.
- Split the selected KPI into its data element.
- After connecting KPI data to your work process, constitute metrics effectively.
- To keep everyone on board, design a bilateral and exceptionally perceptible dashboard.
Winding up: Notes
As a data analyst one should utilize the data in an effective manner for the best results. Ask questions for better evaluation and for efficient and transformative data analysis. Someone once said, “if you can’t measure, you can’t manage”.
Key Performance Indicators are one of the best techniques that evaluate business performance and help in achieving business goals globally irrespective of the business nature, location, and departments. It is evident that without calculating and evaluating the business process and activities, you can’t get success in business, and KPIs help in achieving business goals by evaluating and analyzing customer data.
My biggest takeaway from this article is how when creating your companies KPIs, you must be aware of the different mindsets that exist in your company. Employees can be focusing on profits, customer service, quality, or simply just clocking in to get their work done (in my opinion, this can be one of the hardest mindsets to switch!). KPIs need to be accurate to the process they intend to highlight. All levels of the company should be involved in the development of KPIs for the best results. There is a lot of truth in the statement “if you can’t measure, you can’t manage.” Managers should actively by trying to determine the best KPIs for their departments and not forget that vital information comes from the Genba (actual place) alone.