Managing and improving the performance of any business can be tricky, especially if you haven’t yet figured out what you want your team to achieve. With so many factors to consider when it comes to running a business, it’s important that you establish goals and metrics to understand how your business has been performing as a whole. To help you measure your performance, here are a few things about Key Performance Indicators or KPI business improvement that strategists should be familiar with.
What Are Performance Indicators?
Performance indicators or Key Performance Indicators (KPIs) are a means of defining and measuring the performance and success of an organization. Each organization can have different KPIs depending on what business improvement goals they would like to achieve. KPIs have become an integral part of business operations, making it easier for business owners and managers to understand how their organization, processes, and team members have been performing within a given time.
Benefits of KPI for Business Process Improvement
Establishing a set of KPIs for your business offers a number of advantages to your team and the management:
Gives your team direction
By providing your team with specific metrics for continuous improvement and quality work, you get to prepare them and support them in performing to the best of their abilities. As a team leader, KPIs will give you an idea of how to help each of your team members accomplish their individual goals. These can also help you guide your team on how you can all together achieve your team goals.
Makes performance more visible
Teams that make their performance statistics visible to everyone can be more effective and self-managing. By sharing with everyone a frequent update of how everyone in the team has been performing, this transparency will allow you and your team to have a better understanding of how your team is doing so far. Better performance visibility can help support your goals for KPI business improvement, set everyone’s expectations, and motivate your team members to self-check and improve their performance.
Supports performance evaluation
Setting up KPIs for your organization makes it easier to handle your regular evaluation. Depending on your business goals, identifying your metrics for continuous improvement will make it easier for you to record data and monitor your performance within a given period. By consistently keeping track of your performance and recording KPIs regularly, it will be easier for you to analyze your team’s overall performance by the end of the year.
Makes team management easier
Another great benefit of identifying KPI business improvement goals is that it makes it easier for team leaders to manage their team. By providing your team members with KPIs that they should meet, they will be able to assess their performance individually and gauge how they should perform. The right set of KPIs can help teams achieve their goals for continuous improvement. Team managers won’t have to constantly keep an eye on each team member. As long as the KPIs are being followed and team members are prepared on how to meet them, then managing your team’s performance can be a lot easier.
Helps improve decision making
With the right performance improvement indicators in place, you get to gather enough data about your organization’s performance and use these data to make sound decisions. The results of the KPI business improvement that you gather monthly, quarterly, and annually can serve as your visual for decision making. This will guide you when it comes to creating action plans for the improvement of your processes, your team, and your business in general.
Parts of a Structured KPI
To help you prepare the right KPI business improvement for your organization, here are four important KPI parts that you should take into account as you work on your KPI improvement plan:
1. Measure. To help you gauge how your team is performing, you have to identify how your KPIs will be measured. The more expressive the measures are, the better.
2. Target. When setting your KPI for business process improvement, you should also specify your target based on the timeframe and measurement you will use.
3. Data Source. You should also clarify how and where you will gather the data you will be measuring. This way, everyone in your team is clear on how your KPI results will be computed.
4. Reporting Frequency. How often would you want to monitor your progress? It could be monthly, quarterly, biannually, or annually, depending on what you deem is necessary for your organization.
SMART Way of Choosing Process Improvement KPIs
Following the SMART criteria is one of the best methods of choosing and creating an effective KPI business improvement plan for any organization. If you want to make sure that your KPIs are appropriate and impactful towards your business goals, see to it that they are SMART: Specific, Measurable, Attainable, Relevant, and Time-bound.
- Are your goals Specific?
- Can you Measure the progress of your goals?
- Are your goals realistically Attainable?
- How Relevant are your goals towards your organization?
- What is your Timeframe for achieving your goals?
Business Process KPI Examples
If you are unsure about how to identify the right set of performance improvement indicators for your business, here are some KPI business improvement samples.
- Profit Margin (Net/Gross)
- Current Accounts Receivable
- Inventory Turnover
- Growth in Revenue
Customer Support KPIs
- Net Promoter Score
- Average Support Resolution Time
- Customer Retention Rate
- Market Share Percentage
- Number of Qualified Leads
- Number of Website Visitors
- Average Bounce Rate
- Conversion Rate
- Email List Growth
- Number of New Customers Gained
- Net Sales Percentage
- Average Time for Conversion
- Revenues Growth
- Sales Product Performance
- Employee Satisfaction Rating
- Attrition Rate
- Productivity Rate
- Production Quality Rating
Monitoring Your Performance Using KPIs
Once you are done with choosing your KPIs, you should see to it that you monitor how you and your team members are meeting them. Here are some additional steps to take as part of your KPI process management.
1. Set up your KPI dashboard
When it comes to monitoring performance, visualization is essential. To help you and your team monitor your KPI for business process improvement, you should set up a method on how the whole team can easily check their individual and team goals. You can choose to design your own KPI business improvement dashboard using a spreadsheet or any dashboard software that will allow you to customize what you must display. It should also be something that you can easily share via a link, or if in an office setting, through a wall-mounted monitor.
2. Regularly evaluate the suitability of your KPIs
To make sure that your KPIs are relevant and consistent with your organization and its growth, it’s important to evaluate them regularly. This will help make sure that the goals you are setting for your business support your goals for growth, enhancement, and an increase in revenue. For example, if you have already achieved or exceeded your goals for the quarter, you might want to evaluate your KPIs and set up a higher but realistic goal.
3. Make sure everyone is aware of your KPIs
It’s useless to identify a set of KPI for business process improvement if you won’t educate your team on what they are for. Explaining the purpose of your KPI business improvement approach, as well as how they are monitored and evaluated, gives them a better picture of what your overall goal is for setting performance improvement indicators in the first place.
Setting up your KPI for business process improvement is a practice that you should already be adopting for your business. To help you monitor how your business is doing, you should be able to establish SMART and properly structured KPIs that suit your business and the industry you are in. Keeping your team updated with your KPIs and any changes is also important.
To help you set up your KPI improvement plan, monitor your team’s progress, and keep everyone up to date with the whole process, you can use a virtual kanban board such as Kanban Zone. This way, it will be easier for you and your team to check the changes and updates on your KPIs. With the right set of KPIs, you and your team will have a better understanding of how to continuously improve or Kaizen your business and eventually, achieve your goals for growth.