Value of KPI’s

Aside from your monthly financials, which is your most important “Key Performance Indicator” (KPI), providing a reporting dashboard with KPI’s is a valuable way to monitor the performance of the various parts of the organization.  While the financials give you the big picture, it doesn’t tell you how different departments are operating.   In times of financial success, it can be easy for low-performing teams to go under the radar and it’s not until it’s too late that this is discovered.  A management reporting dashboard with various KPIs is a way to keep track of high-level aspects of your organization which are leading indicators of success within the organization.

A KPI is a specific and measurable goal, comparing actual results against budgeted goals that you expect to see. A KPI looks at parts of the organization, such as a sales pipeline, or employee turnover. Not every business will have the same KPIs - It may vary significantly from industry to industry.  Determining what KPIs you should measure can take time, but once completed, managing and reporting on them should not be a terribly time-consuming process each month.  There are numerous characteristics of a good KPI, but simple, relevant & measurable are three important ones.

One you have determined the measure and the goal or target that you expect your KPI to hit each month, you need to ensure you have a data source, reporting frequency and owner mapped out. 

-          Data source: there can’t be any gray area in how the KPI is measured and tracked. It needs to be objective, not subjective.  If it’s gray and open to interpretation, it’s not a great one.

-          Reporting frequency: While different measures may have different reporting needs, generally they should be reported at least monthly.

-          Owner: It’s a good idea while going through the creation phase of your KPIs to set expectations of who will provide the data for each KPI each month. It’s also Ideal if one person owns the final inputting of data gathered by all the teams.

Not every organization is in the position to share the GAAP financials with their employees, but a KPI reporting dashboard is a great way to keep all your staff informed of the organization’s progress.  This helps with engagement and sets a culture of accountability on future projects.

If you need help or guidance on a KPI dashboard, let me know.