What are Key Performance Indicators and Why are They Important?
What are KPIs
Having talked about talent acquisition, retention and employer branding, it is not time to begin considering Key Performance Indicators (KPI). KPI are guidelines used to understand whether or not the company is operating at optimal levels.
What makes KPIs effective?
What makes a KPI effective is the action it inspires. Often, companies blindly adopt industry-recognised KPIs that may not be entirely relevant to their own company. This is because those KPIs may not fully reflect the vision and goals of their own company. KPIs should be used as a means of communicating the rules and best practices of the company, similar to the way guidelines would delineate the best means of running the company. Clear, relevant and concise information is more likely to be understood and acted on.
Developing effective KPIs
When developing a strategy for your KPIs, start with the basics and have a clear grasp of what the organizational objectives are, be it increased productivity, higher customer satisfaction or a greater number of business leads. Have a clear understanding of how you plan on achieving those goals and how to act on that information. This should be a process that involves feedback from analysts, department heads and various managers, as this is a fact-finding mission, not so much the start of a policy-making quest yet. The main purpose of this process at this point in time is to gain a better understanding of the various business processes and which ones need to be measured with a KPI dashboard.
After setting your KPIs, it is important to keep in mind that these KPIs should not be static, but should instead be evaluated and reevaluated constantly. These steps are essential to ensure that your KPIs are relevant to your company goals and vision. For instance, if you exceeded your financial and efficiency targets for the year, there is a need to evaluate if this is because your goals are too low or because of some other factor and whether or not to raise, lower or maintain the current standards.
Setting and reviewing KPIs can be a challenging and arduous process without the right experience, diverting attention away from aspects of your business that sorely requires attention. Let Prime HR be the one that takes this burden off of your shoulders by providing you with the advice and expertise you need.
3 comments
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