Key Performance Indicators (KPI’s) are the vital navigation instruments used by managers and leaders to understand whether they are on course to success or not. The right set of KPI’s will shine light on performance and highlight areas that need attention. Without the right KPI’s managers have no handle on the business, a bit like a pilot without the controls.
The problem with easily available technologies to store data is that most companies collect and report a vast amount of everything that is easy to capture and measure. As a consequence their managers end up drowning in data while thirsting for insights.
The organizations should have clear objectives and strategic directions in identifying the right KPIs for their businesses. Remember, navigation instruments are only useful if we know where we want to go. Therefore, first define the strategy and then closely link KPIs to the objectives.
The KPI’s that are most critical for any business are those that: measure financial performance, help understanding the customers, gauge market size and marketing efforts, measure operational performance, helps to understand employees and their performance and measure environmental and social sustainability performance.
Based on your area of interest you may consider focusing on a subset of these KPI’s. Nevertheless, when you grow your responsibilities as a manager and the importance of analytics grows within the organization more and more KPI’s become important to track and their interplay becomes important.