Business performance indicators, or KPIs, are an essential tool to ensure that your business is moving in the right direction. Based on the indicators and the company’s performance, managers can make more informed decisions. In today’s article, we present 5 tips for setting good performance indicators for your business!
KPIs should be simple so that the entire team is able to understand them. If you get too complicated a KPI runs the risk of not being able to extract any useful information from your analysis because it will not be understandable by your team. And if the employees do not understand the indicator can be unmotivated, which harms the company’s performance.
Define able indicators to evaluate
For an indicator to be well defined, it is necessary to measure it simply or quickly, that is, it must always opt for quantitative and non-qualitative indicators. In the case of qualitative indicators, there is a high probability of a subjective evaluation. For example, instead of aiming to improve sales, set an indicator on the conversion rate to sales with a set value range. It will be easier to see if the goal of the indicator is being achieved.
Conduct thorough analysis before setting indicators
There is no miracle recipe with regard to indicators. There are indicators that fit one type of business, but that do not make any sense in other areas of activity. Defining indicators only to be defined will create harmful noise to employees’ performance and this will have a negative impact on the company’s final results.
Make this process dynamic
An indicator that yesterday was quite important and completely adequate to the reality of the company, today may have lost its relevance. Companies are living and dynamic organisms and as such changes must be monitored in all areas of the company. Evaluate at least every three months whether the indicators that have “assets” remain the most appropriate for your business.
Involve the whole team in the definition
It is much simpler to get people to collaborate if they are present when defining the indicators they should reach. The teams know their reality better than the top managers, so it is advisable to count on the collaboration of each team when defining the indicators of each department. In this way, each employee will feel involved in the process and, consequently, will be more motivated to achieve the desired goals!