In some ways, our world with its acronyms substituting for words everywhere often seems like a big bowl of alphabet soup. There is one acronym, KPI, which is essential. KPI stands for "key performance indicators.” Every business has a whole basketload of KPIs and can use them to measure many areas of performance, speed, efficiency, value and quality.
There is a saying, “What gets measured can be improved.” The reason is that, without having data, your goals become “fuzzy," for example the saying, “We’re going to do better (or more or faster).”
How much “better” or “more” or “faster” will it take to know you are actually doing it? Without hard data, you are just going by hunch. By knowing your KPIs and what you are accomplishing, it becomes far easier to set goals and develop methods or strategies to get the results you want.
But a key performance indicator is not just a measurement tool. It can be used as a goal-setting tool, a project management tool, a pricing tool and a training tool.
• A retail company measures transactions per hour of cashiers at check-out.
• A telemarketing company developed calls per hour and sales per call metrics.
• Manufacturing companies have days without work-loss-accidents.
• Salespeople use closing ratios.
• Retailers measure sales per square foot.
• Automotive fleet owners measure miles per gallon.
• Engineers use mean time before breakdown.
I’ll bet your business uses KPIs every day to make meaningful comparisons between people, methods, competing products when making purchasing decisions, to set standards for various levels of performance or proficiency and also to help create compensation schedules. The more exact the measurements the easier it is to set baselines and goals -- and then from there to set action steps towards improvement and methods of categorizing the value of the action steps.
Discover your KPIs. It is the first step toward producing real improvements in growth, efficiency and profitability. If some of your KPIs can be improved, develop reasonable improvement goals and strategies to achieve them. Now you will have the KPI numbers to shoot for.