To a great extent, a company’s health and overall success hinge on its ability to achieve consistent results. KPIs (key performance indicators) are quantifiable measures that highlight a company’s consistency at meeting its goals.
Since running a business is a never-ending process of constant improvement and outdoing competitors, operational KPIs can paint a clear picture of a business’s progress. In a broad sense, the most common operational KPIs include:
- Quantity indicators, e.g., the number of quotes and new applicants
- Quality indicators, e.g., conversion rate and rate of approval
- Timing indicators, e.g., time to quote, time to submit, and time to approve
The Importance of Measuring KPIs
From influencing business objectives to fostering employee growth, there are numerous reasons why companies should measure KPIs.
1.Assess Company Health
KPIs are essentially a snapshot of a company’s health. Most businesses only require a handful of performance indicators to assess their vital signs. Regardless of the industry, most companies’ KPIs fall into either of these categories: customers, revenue, employees, and processes. Periodically assessing company health using KPIs is vital for benchmarking against past performance and developing action plans for achieving certain goals faster.
2.Detect Patterns Over Time
Businesses can detect patterns in their key metrics by using the same KPIs every quarter. Patterns paint a clear picture of a company’s seasonality and are a vital facilitator of proactive behavior.
3.Strengthen Employee Morale
Job satisfaction and company culture are among the most important, yet highly undervalued, elements of a company’s overall performance. Companies with highly supportive and motivating cultures tend to perform better than those that do not.
Measuring employee KPIs and acknowledging their hard work for meeting certain metrics can create a sense of purpose and motivate employees to meet future goals. Similarly, employee KPIs can encourage accountability among poor-performing employees and highlight an employer’s weaknesses with regard to fostering support within the workplace.
4.Influence Business Objectives
In today’s super-competitive business environment, having the right data could make the difference between thriving and barely surviving. KPIs provide real-time data that enables businesses to adjust their objectives systematically relative to the prevailing conditions.
KPIs are more than periodic data – they are an essential part of achieving short-term company goals and sustainable year-over-year growth. By using the right KPIs, companies can understand their performance and make timely, systematic adjustments in an informed fashion.