Many businesses use key performance indicators (KPIs) to measure their progress. These are specific goals set by the company to tangibly measure its progress in certain areas. Effective KPIs use highly targeted criteria and establish a certain time period to more accurately measure performance. These criteria are measured in terms of numbers, progress or a percentage of change. Well established KPIs allow businesses to quickly evaluate where they are falling short of the overall goals defined in the business plan.
Define at least one KPI for each area of your business. Each KPI must be as specific as possible, quantifiable and linked to a specific time frame. An example for the sales department may be an increase of 20 percent of overall sales by next month. For quality control factors, you could use a 10 percent decrease in refunds by the next quarter.
Verify that each KPI is aligned with the business's strategic plan and mission statement. These metrics help measure the progress of the business; the idea is that they help motivate employees to ultimately achieve the company's long-term goals.
Ensure that each KPI is attainable. Setting goals that are not attainable lowers morale and does not motivate employees to give it their best. Attainable goals tend to inspire people rather than discourage them.
Monitor the company's progress and fix problematic KPIs. These indicators must be based on data that are reliable and readily available. Adjust KPIs that have faulty data sources or information that can only be obtained sporadically.
Analyze the business's progress based on each KPI as the assigned deadlines arrive. Create a report that shows each KPI's goal and the company's actual situation for each indicator. Use graphs to display the information visually.
Measure the business's progress according to how close it came to successfully fulfilling the assigned KPIs. Use this progress to establish new KPIs and motivate staff. Repeat the entire process to continually track the progress of the company.