Employ Key Performance Indicators for Your Business
Key performance indicators (KPI) are important for any business that wants to ensure its success. KPIs were originally designed to help employees focus on specific areas of their work, but these days it would seem that they have become so much more in the workplace. Despite all these additional benefits, the main idea behind any key performance indicator is to align an employee’s work behaviour with the operational goals of a company.
What that means, more specifically, is that a business can define exactly what needs to done by an individual employee. The business then also has a means to measure the success of how each employee has managed to do their job. The whole system creates a feedback mechanism for upper management in order for them to see how well the company is performing from an operational perspective.
What are the aims of Key Performance Indicators?
The whole reason companies employ key performance indicators is to ensure that there is continuous improvement within their business. All the important aspects that a company holds dear, or at least as a part of their company values, can be measured and adhered to at all levels of the business. Customers are kept happy, employees are monitored and remunerated correctly, and the overall company is managed better as a whole.
In addition to aligning employee actions with company goals, KPIs also offer a chance for the company to commend and reward staff for excellent performance. When a performance review is conducted with an employee, you can show them exactly where they are doing well and where they need to address their behaviour at work. The also help identify current and future problems within the workplace, because it provides a feedback loop for employees to communicate back to their employers.
What is measured in your KPIs?
So what exactly is measured in a key performance indicator and how do you know it can be measured in the first place? Well, one of the requirements for creating a KPI is that it has to be measurable so that your staff will be happy to know that they won’t be measured against aesthetic criteria that are subject to conjecture. They will be measured according to actual work related performance that has to be managed by the employee directly.
If you take a call centre agent as an example, you could measure the average number of calls taken within a given month or quarter. Each call is logged and accounted for, so the consultant can see exactly how many calls they have taken and how they compare to the other staff in the same position. They also get to see how they compare to their previously agreed targets that would have been signed at the start of the quarter.
Reflecting the Company Goals
The company goals are always a first priority, not only for the managers and shareholders, but for each and every employee as well. Each company has different goals which they want to achieve and so every KPI will be different, albeit specific to the company itself. However, you will find that they fall within specific categories that relate to the business in some way.
For example, you may find that some of the goals are tied into the finances of the company. Another example would be customer satisfaction based on a specific employee’s duties. The first example could be how a claims department saves money on each claim, while the other example could be based on a customer survey report obtained from an actual customer.
The Importance of Making Them Measurable
If you don’t make your KPI goals measurable, there is no “real” way to determine how an employee has done. If performance was based on a matter of opinion for example, it would open up room for debate and argument on the employee’s performance. When you base it on tangible and accurately measured reports, it keeps the results based on actual performance instead.
As long as the results are measured like that, there will always be clear indication of what is currently being done, and what can still be done to help improve the way the company does business. That will go a long way to improving the overall profitability and sustainability of your company.