Setting Key Performance Indicators (KPI’s)

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Key Performance Indicators are quantifiable measurements that reflect the critical success factors of a business.

Why are Key Performance Indicators important

• Owners are overwhelmed and distracted with day to day activities and tasks.
• Owners must make important decisions, quickly, with greater consequences, and often with limited information on hand.
• Owners concentrate on the tactical decisions and neglect the strategic ones.

 Key Performance Indicators should be used for:

• Communication
• Informing
• Diagnostic
• Learning
• Making decisions and taking action

NOT CONTROLLING

How To Implement Key Performance Indicators

Step 1:  Define your strategy

• Strategy reflects Vision, Mission and Values
• Set goals
• Most important business objectives
• - – What “drivers” are critical to success
• - – What impacts driver results
• - – Align team members on strategic issuesIdentify barriers

Step 2:  Audit Existing Measures

• Assess strategic fit
• Identify what data is available
• Review measurement processes
• - – Accuracy
• - – Timeliness
• Identify gaps

 Step 3:  Develop New Measures

• Bridge the gaps identified in Step 2
• Measures must reflect performance and progress of business
• Must be quantifiable
• Must be comparable with another number
• - – Last year
• - – Budget
• - – Goal
• - – Trend
• Can be acted upon

Step 4: Analyse and Report

• Easy to read
• One page summary (Dashboard)
• Graphs

Step 5: Continuous Improvements

• Set priorities based on strategy
• SMART goals
• Assign accountability
• Track improvement
• Set new goals!

4 Things Every Business Owner Should Know

1. The profitability of the business depends on how well the employees consistently perform critical activities.
2. Employees perform best when they understand how their performance affects the bottom line, and how their performance is measured.
3. Small changes in critical areas can have a great impact on the bottom line.
4. What gets measured gets done, and what gets rewarded gets done again.

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