To continue the conversation about Financial Visibility, we present the following 3 steps to integrate Key Performance Indicators (KPI) into your daily business operations.
1. Choose your metrics and set goals
A company’s key metric is seemingly clear—it all comes down to the bottom line. However, there are a number of indicators that lead to profitability, and each company’s economic drivers are unique. Choose a few indicators (i.e. # of client acquisitions, monthly sales totals, etc) that are meaningful and that you have the ability to influence. These become the key drivers for your company’s success: make improving these indicators a priority for all employees. Non-profits should also keep their eye on the bottom line—whether it be social, environmental, or financial. If an organization’s goal is to promote child literacy, a metric such as number of reading hours can serve as a social indicator of success. And remember: it’s important to limit these metrics to just a crucial few in order to keep management focused. Once you have your select few, create specific goals for each and track your progress on a regular basis.
2. Make them visible
You’ve chosen your metrics…now what? These metrics are useless unless incorporated into an organization’s daily operations in a meaningful way. They need to be tracked and be accessible to employees in order to drive operations and enable nimble decision-making. Methods for displaying metrics may vary from a custom software package displaying real-time data over your production floor to a sophisticated Excel dashboard available on demand to simply using markers on a whiteboard. Regardless of your method, make sure all stakeholders have access to these key metrics at all time.
3. Create a culture of tracking
Tracking data can be an imposition for all parties involved. If employees are asked to track key pieces of data without understanding why they are tracking it, this may lead to inaccurate reporting and/or resentment. Instead, get your employees excited about certain key milestones. For example, New Orleans-based Federated Sample does an excellent job of rallying its employees around its key milestone: number of market research surveys completed. Employees have real-time access to survey counts coming in, and each million survey completions is a cause for celebration.