KPIs: What You Measure is What You Get
As you head to lunch after your Monday morning team meeting, something is bugging you. When you started your company years back, you decided on Day 1 that you wanted to reject the buttoned down, corporate feel of past employers. In fact, you credit a lot of your success to the people you attracted to the laid-back work environment you cultivated. But you have reached a bit of an impasse.
Gone are the days when you knew everything going on in your company. Your free-flowing team meetings are getting increasingly chaotic. Everyone talks about how well everything is going in their department, relying on stories and anecdotes. Yet you know profit margins have been slipping for consecutive quarters. Something is wrong, but you cannot put your finger on it.
It’s a sad reality, but you are starting to realize why companies eventually adopt “corporate” feeling practices. You used to rely on your instincts to make decisions, but you are no longer a part of the hundreds of small, seemingly inconsequential decisions made in your company these days. You outgrew the nitty gritty—it was your passion for an idea, not a spreadsheet that convinced you to start your company in the first place. Now that you have had success, you are starting to realize your need to adopt some different business practices.
Let’s take a look at a practice to consider implementing regardless of where you are in your business lifecycle. This practice can provide you with tremendous value today, as well as when you eventually decide it’s time to sell your company.
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Key Performance Indicators (KPIs)
KPIs are guideposts that show us how we are doing. Depending on the KPI and the business, they might be measured real-time and continuous, daily, weekly, monthly, quarterly, or annually. When defined properly, most businesses can create a strong window into performance with only 3-5 KPIs.
By measuring, publishing, and discussing KPIs with your team, you can empower your people to break free from relying on stories, anecdotes, or you as the owner to tell them how they’re doing. Your team will learn how they can influence the KPIs (and get the credit for doing so).
Changing Behavior
As your team gets more comfortable managing your company’s KPIs, it will be time to start setting goals. For example, let’s say you want to increase sales per employee by 10% next year. As is the case with many KPIs, this measure touches on multiple departments and requires cross-functional coordination. By placing the focus on a shared language around your company’s specific KPIs, communication amongst your leaders will increase, behaviors will change, and results will improve, all else equal.
It doesn’t have to feel “corporate” either. As mentioned above, keep your list of KPIs brief and use them as guideposts. Don’t overreact to one bad reading. Instead, use it as an opportunity to proactively address a potential issue before it’s a real problem.
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Need Help?
At Doescher Group, we help business owners manage their businesses, rather than having their businesses manage them. If you are looking to get better results with less headaches, might you need to implement some KPIs for your business? Please reach out today if you’d like to learn more about how we can help.
