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How to track your business performance
Tracking your business performance is essential to your businesses growth. Many companies use key performance indicators (KPI) to track the growth and success of their company. The KPIs focus on 2 main things: track the health and growth of your business, and determine where you are in your progress towards your business development goals.
Typically, your company will develop a mission statement, identify the stakeholders, and define the goals. Then, the KPIs become the measurements used to track the progress of those goals.
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Some companies use KPIs to track the percentage of its income from return customers, others use them to track the number of clients who were assisted throughout the year. No matter what KPIs you decide to use, you need to be sure they reflect the businesses goals and are measurable.
The KPIs allow everyone in the company to have a clear understanding of what is important and what they need to do to make the business performance goals happen. Many companies post their KPIs all over the office to remind their employees what they need to focus on and how you are measuring their individual performance. By showing the target and the progress toward the target, each employee will know how they are performing and what they need to do to reach their goals.
Here are a few ideas to help you set up your KPIs:
- Consider where you are and where you want the company to be
- What areas need tracking to help your company obtain its goals
- What values will you use to measure the KPIs? Develop a description of the minimum and maximum values.
Some companies have used KPIs to determine their turnover ratio. Here is a good example of how a good KPI should look:
"Title of KPI: Employee Turnover
Defined: The total of the number of employees who resign for whatever reason, plus the number of employees terminated for performance reasons, and that total divided by the number of employees at the beginning of the year. Employees lost due to Reductions in Force (RIF) will not be included in this calculation.
Measured: The HRIS contains records of each employee. The separation section lists reason and date of separation for each employee. Monthly or when requested by the SVP, the HRIS group will query the database and provide Department Heads."
As you can see this KPIs clearly defined the process they are tracking and looking for reasons as to why there is employee turnover. They measured this by the records of the Human Resource department that includes different listings pertaining to the reason and date the employee left the company. This way, they can determine why they feel many employees are leaving after 3 months, etc. Because of this KPI, you can set up a new KPI for reducing turnover rates by 5% each year, etc.
One important thing to remember when you are setting up the KPIs is to keep them reasonable so that everyone in the company can work together toward achieving the goals. Many things in your business are measurable, but that doesn't mean they will become success factors to your business.
One good strategy to try is to have the supervisors of each department determine what KPIs are essential to helping them progress towards their monthly goals. Then, meet with each department and determine one main KPI they should implement for the month. You can even have the KPIs compete against each other by department to see which department can achieve their goals quickly.
Whatever you decide to do to track your business performance, remember that the ultimate goal is to grow your business. Set up KPIs that look towards the future growth of the company.
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