Growing or starting a business is an exciting endeavour but it’s important to build a strong infrastructure to ensure every department runs smoothly. One major building block to put in place is the ability to monitor your business objectives — this can be easily done via key performance indicators (KPIs).
What Are KPIs?
KPIs are a type of quantifiable performance measurement to evaluate both present-day targets and the overall success of your business. This allows managers to analyse whether or not projects are moving in the right direction and to make changes where required.
If your company has the potential to grow further, read these 5 reasons why you should consider introducing KPIs into your company’s business strategy.
1. Measure Your Targets
Business growth and change go hand-in-hand, so it’s essential to keep track of whether or not these changes are working in your favour. To do this, you should list some realistic goals you hope to achieve over a set period of time.
For example, if you’re selling a product online, you may employ a marketing employee to drive more traffic to your website in order to create more sales. Your KPI for the next quarter could be that you’d like a 10% increase in website visitors and that 2% will buy something. Have a plan in place for how you will monitor this — such as setting up Google Analytics — and when the quarter ends, you can dig deep to find out whether or not your goals have been met.
2. Initiate Educational Conversations
Using the results from your last set of KPIs, you can paint a clearer picture of your business strengths and weaknesses. This is a fantastic advantage as you can now adjust those changes accordingly.
This is the perfect time to spark up important conversations within the workplace to ensure that everyone knows how to improve for the next set of KPIs. For example, although your marketing employee is successfully bringing in 10% more traffic to the website (this is an excellent opportunity to reward great work too), only 1% of visitors are buying something — so this is something to look into. Open up the conversation to find out why that is. Perhaps the website speed is too slow or the product descriptions aren’t clear enough. Additionally, you can analyse whether the set KPIs are an effective measurement and make relevant modifications if an employee feels the targets are unrealistic.
3. Get More Involved in the Details
Often, CEOs and high-level managers are so busy with the vision and bigger tasks required for business growth that day-to-day details can feel a long way away. As KPIs provide an immediate snapshot of your company’s overall performance, you are continually aware of how the business is performing, no matter how remote you are from everyday operations. KPIs enable you to get more involved in the smaller details and you can make on-going adjustments throughout the quarter to ensure that everyone is on track to meet their final target.
4. Encourage Accountability
As your business grows, the number of employees is likely to increase too. This means you must keep on top of how your staff are performing. KPIs are a good performance indicator as you can reward staff when targets are met and discuss strategies when they are not. Perhaps a target was unrealistic or it could be an indication of underperformance, in which case, this can be discussed further.
It’s important to keep in mind that KPIs only offer a quantitative analysis of work performance so it’s a good idea to encourage qualitative feedback too. Using KPIs as a starting point, you can hold a one-to-one formal meeting to discuss employee performance reviews on both sides. This provides both the employee and yourself the opportunity to talk in more detail about other workplace performance indicators, such as punctuality or how they’re settling in.
5. Boost Morale
There’s no denying that a positive KPI report creates instant positivity, along with a sense of individual purpose and team solidarity. No matter what role your employees are in or at what level, everyone enjoys being rewarded and this is the perfect time to do it.
No matter how small or large your business currently is, there’s no wrong time to introduce KPIs — you’ll only wish you brought them in earlier.
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