Measuring success is a crucial component for improving the productivity and profitability of your business. However, success is not defined by revenue alone. Key performance indicators determine the satisfaction of your customers, the effectiveness of your employees' performance, and the overall morale and culture of the company. Find out if you are utilizing key performance indicators to your advantage.
Evaluate Your Current Assessment Strategy
Take a close look at how you are measuring the success of your employees, departments and teams. Are you implementing performance reviews, have you incorporated tracking software to determine peak times of productivity, and have you implemented methods for your customers to provide feedback? If the answer is no to all three questions, then it is likely you are not using key performance indicators effectively.
Analyze Past Assessments
Businesses can assess any aspect of their operations, but it is important to narrow down your scope and focus on a few areas of performance at a time. An overabundance of assessment takes time and energy away from your employees and managers that could ultimately impact your profits and productivity. Evaluate what you have measured in the past and assess whether your methods have aligned with the company's goals and vision. Did your goals during assessment link to individual performance? Were internal processes established to meet client expectations or the company's strategic goals? Did your management team analyze the results and make recommendations to improve the performance of employees and the company as a whole? If not, it may be time to transform how you utilize key performance indicators.
Understand Your Options
You may have established key performance indicators without even knowing it. In fact, many of these indicators are embedded into daily processes. The key to success with assessment is to efficiently evaluate the financial aspects of the business while also analyzing customer, process and people metrics.
Financial metrics measure prompt management to analyze gross and net profit margins, strategies to manage and reduce costs, and the cost of goods sold. Key performance indicators related to finances also measure sales by region, processes related to collecting accounts receivable and how the actual overhead compares to the forecasted budget.
Customer metrics focus on acquisition and retention. For example, consider the value your company receives from developing long-term relationships with clients. Are you spending adequate time and money to acquire new clients? Are these new customer acquisitions providing higher profits? Customer metrics also focus on satisfaction. Are you requesting feedback through social media, online polls and voice calls? Analyze how the feedback translates into repeat business or referrals. An additional key performance indicator focused on customers is to tally the number of clients you have acquired yet lost. This indicator helps organizations identify how customer needs are not being met.
Process metrics indicate the effectiveness of your company's operations. For example, customer support tickets help identify how many tickets have circulated through your departments, the number resolved and the average resolution times. An analysis of how many defective products are produced also indicates if your internal processes are effective.
Key performance indicators should also focus on the people in your organization. Are you evaluating your employee turnover rate? High turnover rates can indicate problems within the workplace culture, salaries provided, the overall work environment and incentives offered. Key performance indicators should also help to identify the attractiveness of your business to job seekers. Are you tracking the number of applicants for job openings? An analysis of your employees' satisfaction levels is also worth measuring. Distribute surveys, encourage feedback and measure productivity to determine if efforts are needed to boost morale and motivation.
The day-to-day operations are crucial to maintain a productive and profitable business. However, implementing key performance indicators is worth the time to ensure your employees and customers are satisfied, as well as determining if your internal processes are working efficiently. Take a clear assessment of your key performance indicators on a regular basis to keep your business running smoothly, gaining necessary exposure and attracting clients and employees.
Photo Courtesy of Stuart Miles at FreeDigitalPhotos.net
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