How does your enterprise score?
Key Performance Indicators (KPIs) are to your business, what the score is to a football game at halftime. They simplify the random chaos that is the business game that never ends. Many people mistake measures such as ‘sales revenue’ or the ‘ratio of receivables to payables’ for the only KPIs that matter. They are important, being akin to the vital health signs that your doctor checks; your heart rate, blood pressure and cholesterol levels for example. True KPIs, help entrepreneurs understand whether their business is on course in relation to their vision, mission and strategic goals. However…
the problem with KPIs…
…is that the term is an overused cliche. Too many people take it to mean ANY kind of data or performance metric used in relation to business performance. At PBC we ensure that we first clarify the needs of the entrepreneur for information and then support them in the design of the most appropriate indicators of performance for their unique business. First understand the key performance questions before creating the KPIs.
Beware ‘analysis paralysis’.
Too often we come across businesses in ‘analysis paralysis’. This is where people have identified all those things that are easy to measure or count. They gather all the data from every source and put it in a report, usually in lots of pretty graphs. Then they scratch their heads and think “what is all this stuff telling me?”
For more information, please download my complimentary white paper on Measuring Performance – 4 Top tips to maximize your KPIs.
This originally appeared in my August 2012 Newsletter.