By: Kathy Kent Toney, President of Kent Business Solutions
I’m sure many of you in leadership positions have asked yourself these questions:
How can I do a better job of driving profitable growth in my business?
How can I drive the right behavior of my employees?
The options can be overwhelming. But there's one proven thing that can drive profitability...the effective use of KPIs.
There’s been much talk these days about the importance of KPIs, especially with ever-increasing competitiveness among companies. Even so, many leaders either don’t use them or don’t effectively deploy them.
You may be a newbie with KPIs or have been using them for years. Either, way, there’s always more to learn, right?
That’s why I decided to interview David Leavitt, a Principal with ExecHQ. He’s a fractional C-Suite executive who is also advises companies on developing KPIs.
So, let’s dive into it!
Kathy: Welcome David. It's great to have you with us!
David: Thank you. I'm very happy to be here.
Kathy: Let’s start off with a brief definition of what a KPI is (for those who aren't familiar with the term). Then, can you give us some examples of them?
David: Sure. KPIs, or Key Performance Indicators, are easily quantifiable data that allow companies to evaluate their success against specific targets and objectives.
Organizations rely on these measures to strategically determine the quality of performance and gauge their progress. That is to say, the more you know your strengths and weaknesses, the better you're able to plan your operations, address issues and ensure productivity in the workplace.
Some examples of KPIs might be:
There are a myriad of things you can measure to help drive the success of your business.
Kathy: Makes sense. Can you tell us how valuable KPIs can be for business leaders? Also, if they aren’t using them, what are they missing out on?
David: Many of the best companies have established a data-driven culture and they’re focusing on improving the data they already know about…through data discovery and investing in tools.
It's safe to say that remaining competitive in the business world today depends on understanding such data. Using KPIs properly can greatly affect their decision-making capabilities and can improve the results of the business.
Kathy: I agree. I think I could probably use a better selection of KPIs for myself!
Do you have any advice for those who haven't used them before and how can they get started?
David: Certainly. There's plenty of data out there. In fact, you can get overwhelmed with all the data that is created within a business, small or large; however, my advice is to keep measures simple.
What I try to get people to do is focus on the top-20 most important areas of the business. If they do that and leave the 80% behind, they'll have a better handle on measuring the things that will give them the best and most important results for the business.
When you arrive at the place where you are really good at using KPIs, you might want to invest in some technologies, such as business intelligence tools; however, you first need to define your goals and objectives and then put together your plan of what you're trying to achieve in the business. That will put you in a better position to measure the gaps in the plan.
Kathy: Sounds good. Do you have some advice for leaders who have used KPIs for a while so that they can get even better at using them?
David: Definitely. A good rule of thumb is to create KPIs that are in-line with your long-term business goals. These should be the major indicators that are most critical and crucial to your operations. The more you learn and discover, the more you will want to measure. So, stay focused on the indicators that are adding value.
And for those that have been at it for a long time, I would suggest investing in a business intelligence platform or data analytics tool to reinforce your monitoring efforts, sooner than later. There are a lot of really inexpensive third-party data analytics companies that are available in the marketplace today as well.
Kathy: That’s great advice, David. That’s a wrap. Thanks for joining us today!
David: It was a pleasure.
Speaking of platforms, one great way to measure KPIs is with Accelerate. It’s a workflow management tool that generates dashboards with pre-selected KPIs. You can create your KPIs in the system so that they are automatically populated through employee task accomplishment.
That means managers are able to not only gauge team performance, but can drill-down to view individual employee performance. This can provide data that leads to more effective coaching for under-performing teams and employees.
This is just one of many benefits Accelerate provides.
Interested in learning more? Click the button below to schedule a time to chat!