When KPI Really Means “Keep Profits Increasing” (Hint: It Always Does)

by Jennifer Berry on March 11, 2013

How’d you like that headline?

Yes, you and I both know KPI is an acronym for Key Performance Indicator but the goal for most organizations is to utilize these valuable metrics to keep profits increasing.  KPIs are the lifeblood for any company; they provide the pulse of the business.  All of the various metrics that people analyze provide valuable information to guide decision making and help chart a company’s path toward realizing their full growth and profitability potential.

They exist for no other reason.

This post by Rob Petersen, called 12 Experts Define Key Performance Indicators, provides a simple overview and four-minute video about KPIs. Petersen states that one of the best definitions he has heard is “KPI’s are an actionable scorecard that keeps your strategy on track. They enable you to manage, control and achieve desired business result.”

This article supports the notion that you do not need a lot of metrics. You need to select them carefully, report and take action.

Steps to consider:

  • Desired Business Result: Begin with a clear understanding of the desired result and be specific – how will you achieve your result? If you are clear about where you are going you can construct KPIs that get you there.
  • Actionable Scorecard: Choose a handful of measurements, generally no more than six or so that you believe are the most important to the achievement of your goal.
  • Keep Your Strategy on Track: You have raw numbers – the data. Use this data to measure your progress against the achievement of your desired result. And choose a comparison period: are you comparing this against last year, last month, last quarter?
  • Dashboards: This data provides graphical representations for your dashboard.

Now is always the perfect time to review your organization’s existing KPIs to determine if they are still relevant and it is the perfect time to create new KPIs if your company has not done so in the past.

Comments on this entry are closed.

Previous post:

Next post: