Many of us who own businesses want to accelerate the efficiency and proficiency of our employees. How we do this is a challenge for many. These challenges are over accepting and implementing new ways of collecting data. One new way to collect data on the efficiency and proficiency of our staff is to use the Key Performance Indicator testing measures.
What is the Definition of Key Performance Indicators?
Simply put, Key Performance Indicators are a measure of how well a business is meeting its performance goals and objectives. Key Performance Indicators help you; the employer measures every aspect of your business on the performance and proficiency of your company. When you use Key Performance Indicators, you are essentially trying to figure out if the business is moving forward, backward, or standing still.
If the business is moving backward or standing still, you will want to make adjustments in that area of the business. You will want to continue to make these adjustments until the business begins moving forward in the direction of your goals. You should have realistic expectations for your company. Your employees should be able to meet these expectations with or without reasonable accommodations.
It is never an easy area to be the Chief Executive Officer of a business. That means everyone in the company is counting on you to make decisions that will impact the company for the good. Utilizing Key Performance Indicators will help you do so.
How do I Determine Which Key Performance Indicators to use?
There is no easy and clear answer to this question. Not all organizations are created equal. In fact, not all businesses will be in the same industry. What we are saying is, you might find some Performance Indicators that work for you while the business next door finds the opposite.
Every business has its own goals, so it is important to sit down and assess what those goals are for your entity. Once you have determined what the goals are for your company, you will have a better idea of what types of Indicators to use.
Not all Performance Indicators are going to be suitable for your company. There might be some that are suitable for your company’s industry, but they do not align well with your goals. There are many questions to ask when deciding which Key Performance Indicator to use for your organization.
It can often become overwhelming. There are guides on the internet available to assist you in making those vital decisions. These guides are often eBooks, and they are usually no charge.
It does not have to be that overwhelming. There might be some Indicators that will work better for your company than others. The important thing to remember when selecting which Key Performance Indicators is that the Indicators should align with both the business goals and the industry that the organization is in.
Focus on a Few of the Metrics
There is an old saying that says, “Less is more.” That is so true when it comes to Key Performance Indicators. As we have mentioned, the Key Performance you use for your business will be different for your neighboring companies Key Performance Indicators.
When selecting which target to monitor, it is best to pick between 4 and 10 KPIs. The number might seem counterproductive to you. I am sure you want to know how every aspect of your organization is performing.
The best way, however, is to select just a small number of Key Performance Indicators to monitor. The fewer you have to monitor, the less overwhelming it will be for you. Simply put, your Indicators should be in direct relationship with the goals you have for the company.
Focusing on a few of the Performance Indicators as possible will give you a clearer picture of the direction your company is going, as opposed to trying to utilize all Key Performance Indicators for your industry. That being said, let’s talk now about what you should do if you find the selected Indicators are not what you want to monitor.
You should, of course, monitor no more than 10 Performance Indicators at a time. If you chose 10 to start with and find one is not working the way you want it to, you should decide to stop monitoring that Indicator. After this decision, you can select only 1 more. You can choose 1 more for every 1 that you drop and stop monitoring.
Qualities of Performance Indicators
You might be asking yourself what do good KPIs measure? What should you, the CEO, of an organization look for in choosing the Performance Indicators to use? Is it possible to only measure 1 of the Key Performance Indicator?
There are many qualities to good Indicators. These qualities include Key Performance Indicators that provide standard data on the direction the organization is moving in accordance with its goals. In other words, if you are trying to get an overall picture of the performance of the company, you will want to select the Key Performance Indicators that are best suited for this.
Excellent Indicators will also measure the timeliness and productivity of the staff. That means you can decide to keep the employees who are performing well. You can also decide what to do about the staff members who are not performing as well.
Indicators that are good will measure the balance between leading and lagging indicators. That means that you can quickly lookup results for the indicators. You can then decide what to do about those indicators that are lagging.
It is important to remember that when you are analyzing this data, you are tracking all aspects of the organization. You should select Indicators in 1 area of each target you want to be analyzed in your organization.
Doing so will give you a clear idea of how the company as a whole is doing. You should be able to notice trends that align with your goals.
Employee engagement is vital to the company as a whole. To measure employee engagement, simply select the Key Performance Indicators associated with this area of business. There are many benefits to having actively engaged employees, including higher productivity levels.
The Key Performance Indicators for employees measure the quality and performance of employee’s production. These Indicators work in all areas, not just in an industry that relies on production.
There are a few questions that you need to ask yourself when measuring an employee’s performance. Is the associate being effective in their work style? If not, what should be done with the employee?
Another question you should ask yourself is the team member being efficient with the allotted resources. Employers want their staff to be efficient because it would cut into the profits of the company otherwise.
The final question you need to ask when measuring employee productivity is, has the employee been learning? You will, of course, want the employee to learn their position promptly. Employees can then teach newcomers.
Productivity vS. Quality
Productivity is almost always used when there is employee appraisal. This is a measure of how much the employee can produce in an hour. Is the employee effectively utilizing the time when they are out on the production floor?
If the employee is utilizing time and being productive, should the employee get a raise? Staff members who are† productive should qualify for promotions and raises.
Quality is a measure of how effective each employee is. You will want the employee to be effective and utilize resources and correctness throughout their work.
However, what is the point of productivity is it is poor quality? An equal balance of productivity and quality is required to increase profits.
Measuring employee’s effectiveness is also an important use of Key Performance Indicators. Attendance can be related to the effectiveness of the employee. There are a number of ways to measure the employee’s attendance.
You want to keep track of attendance because each customer service representative is charged with being part of the customer service team. The customer service team takes customer questions, comments and concerns.
When 1 staff member for the customer service team is consistently late, they are affecting the entire team’s productivity. That means there will be fewer customer questions, comments, and concerns taken.
When this happens, customers are often put on hold for longer wait times. Your customer service team may not be able to successfully complete every call, as they will not have enough team members.
Creating Standards and Goals
There are a few things you need to set straight before you can measure an associate’s productivity and quality. You will have to first set performance goals. Along with such goals, you will want to set some standards for all staff members to abide by.
All employees who hold the position of sales representative, for instance, might need to achieve a certain amount of sales during a specified amount of time. If these standards are not met, you need to decide what type of discipline to enact on the employees that do not meet company standards.
Goals are similar to standards. However, the goal is tailored to individual associates. For instance, you have sales associates that all started at the same time, you want each 1 based on their previous skills to meet certain goals.
Goals are not a group effort. These are individual efforts. You should create goals based on individual skills and job codes.
When you have completed your goal analysis, you should write them down for every employee. Make it clear to all staff members that to get an excellent score on their next review, they will have to meet their goals for the month or quarter.
LET'S GET STARTED
Find out more about how Shiftpixy can empower your business growth.
What is the Smart Key Performance Indicators?
Smart KPIs is an acronym. Every letter in the acronym stands for something that the Indicators should stand for. Let’s explore the acronym one letter at a time.
Specific-be sure to spell out what all Key Performance Indicators will measure. Make sure these are specific to the goals and standards you have for the company as a whole.
Measurable-there should be a way to measure the performance of each Key Performance Indicator. These should be measured according to the standards of the company, not the individual.
Achievable-you must be able to deliver on the Key Performance Indicators. If these goals and standards are not achievable, how do you expect to measure them?
Relevant-the Indicators must be measuring something of importance. They must be measuring something that is relevant and relatable to the company.
Time-There must be a time frame attached to the Key Performance Indicators. This time frame must be in the sense that you are going to achieve the goals set for the company by a certain date. It always must be attainable.
If you are measuring an employee’s performance with the SMART rule, you will need to measure it thoroughly. The only exception is that you should keep in mind the individual SMART Indicators are different from the Performance Indicators for the company.
Employee performance reviews can be based upon the SMART method. The amount of Indicators that can be measured with the SMART method are endless.
What are the 4 Challenges of Key Performance Indicators?
Companies using KPIs have disadvantages and challenges they must face. There are 4 challenges in particular that face all companies in any industry.
The biggest challenge for most entities is that when a firm has no concise plan. That means they are vulnerable to failure. This challenge includes when a company is too reliant on indicators, the company’s success and failure can be measured.
Another challenge faced by firms of all sizes, but mainly the larger corporations, is the fact that what seems like an important business measure to one person in the company might not seem as important in other departments of the business.
The third challenge faced by a business utilizing Key Performance Indicators is that when the indicators are based solely on job performance, it might create conflict among employees. This conflict can lead to corruption and chaos. There is also the possibility that there will be some bias in the building.
The final challenge facing companies using indicators is there must be an internal support system in place for the indicators. There will be no need to have the indicators if there is no support system for them. This is one of the biggest hurdles facing many businesses as they try to implement indicators throughout their companies.
When a business does not work to overcome these challenges faced by implementing indicators, it can be doomed. That is not what any entrepreneur wants for their business. So, they will need to take the necessary measures to overcome these challenges.
What is the Key Performance Indicator Software?
This is software that runs on your computer. You can use it to measure the success of the business as a whole. You can also use it to measure the successes and failures of individuals within the organization.
There are many companies that have risen to the challenge of providing a business with Performance Indicators to measure the successes within the organization. These businesses are competing with one another. Indicators are usually around the same no matter the company you select.
We have compiled a list of our picks of the top 5 Key Performance Indicators any entrepreneur should be interested in purchasing. There, of course, are plenty more beyond the five mentioned in this article.
We chose these five based on the features they have available. These 5 Key Performance Indicator software is feature-rich. They are also all around the same fee.
If you are having difficulty with selecting 1 of these 5 software titles, you can conduct an internet search for Indicators that might have more features. There also might be others that are a little less.
We have found through our research that the pricier an item, the more feature-rich it is. Of course, every entrepreneur is on a budget. Only the owner of the business can determine what the budget is for the software.
The Best Way to Measure Employee Performance
When we think of an Indicator, we think of the measurement of success. A company is defined by its employees. By this, we mean that business-to-customer firms are always in the customer’s limelight.
These types of business entities are often judged by their employee’s behavior. here is no better judge of an employee’s conduct than the public in which they serve.
The best way to judge and rate an associate’s performance is by having the customers take a satisfaction survey. These customer satisfaction surveys are not only good for the business to judge the employee, but the ones with incentives are often more appealing for a customer to take.
Offering the customer an incentive to complete a survey is important. It is not as important, however, as keeping the survey short, simple, and to the point. Today’s customers are in a hurry.
They do not want to spend fifteen minutes on a survey about their visit. To entice more customers to take the survey, you should make it no more than a dozen questions.
The Making of Your Key Performance Indicator
Remember, you are not working with a team of data analysts. You will want to keep the data displaying your Key Performance Indicator short and simple. Getting to the point means no one will need to look through a spreadsheet to find the exact data they are looking for.
Most people who are interested in the company and how well it is doing will appreciate a short and simple display of the data. The data should be presented on a small screen and only small amounts should be displayed.
What are the Benefits of Key Performance Indicators?
The biggest advantage of Indicators is the fact that they can be used to entice your employees to work harder. Employees who are empowered will be more willing to work than employees who are not.
Those employees who own a share of the knowledge from your Performance Indicators will know what is expected of them. They will be more prone to work in order to accomplish both their personal goals and the goals of the company.
Are all Indicators Important?
If you are working or operating a company in the hospitality business, you might find some Indicators that are not useful to your business. The Key Performance Indicators that are useful to your business might not be suitable for someone else’s.
For instance, the core business structure of any restaurant is its customers and the profits. These customers, of course, probably think a restaurant’s people are its staff.
The Indicators in a restaurant might be to influence the staff to be happy. Also, they might tell of the productivity of the cooking and wait staff.
Examples of Key Performance Indicators
There are many industries in the business arena. There might be just as many Key Performance Indicators to thwart off any bad business. The Indicators teach the entrepreneur or CEO what is going on with the company. Here are some examples.
- Deciding on Dollar Value of Contracts Signed During a Specific Period
- How Long Did it Take You to Convert the Visitor to a Customer
- What Was the Net Sales; Either dollars or Percent
- Current Accounts Receivable
- Inventory Turnover
- Revenue Growth
- Promoter Score, Net
- What Was the Support Ticket Resolution Time
- What is the Percentage of Market Share
- How Satisfied are the Employees
- How Long Does It Take to Fulfill an Order
- How Long Did It Take to Get to Market
It is essential that you have these and of the Indicators, you are working with laid out in a simplistic way. If you do not have them in a simple way, how will you know where you stand on the advancement of your goals?
In conclusion, this article discussed Key Performance Indicators. We went on to tell you what Key Performance Indicators are, what they can and will do for your business, and what kinds are available. We wrapped up with a few examples of Performance Indicators and how they might work for you.†
LET'S GET STARTED
Find out more about how Shiftpixy can empower your business growth.