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Really Effective KPI Setting For Dummies
Adam Fox • Jun 28, 2021
It's Easier Than You Think!
As a follow on my video about keeping the score within your business, I have been inundated with calls from business owners asking what numbers they should be measuring in their businesses. It seems to be a common misconception that measuring KPI’s (Key Performance Indicators) is really hard, when in reality, it just isn’t.
It’s easy to overthink when you’re setting KPI’s for your business. It’s true what they say: That sometimes, less is more.
A few key numbers measured consistently, and measured well, will have a far bigger impact on your business, than a lot of numbers measured poorly.
A good KPI, makes it absolutely crystal clear, what is expected of an individual, or a department within your business.
That is all.
A fantastic way to set KPI’s is to get your team to tell you what measures their success within their roles. Hey presto, they do the hard work and you now know how to measure their performance.
Now I have made that sound really easy to do, which if approached in the right way it is, but I understand not every team member will necessarily understand or buy into the importance of getting this right. I’m sure that a significant proportion of your team however will. Maybe get them to help with the KPI setting.
An engaged team, is a productive team.
Employees perform best when they understand how their performance contributes to the success of the business, and how their performance is measured.
Small changes in the right areas of your business can have a huge impact on your bottom line.
A phrase I heard a long time ago and has stuck with me ever since is: “if you want them to respect it, you have to inspect it”. In this case, you are inspecting the teams performance using numbers. Numbers don’t lie, they tell you exactly how things are.
A few tips to help you setting KPI’s for your business:
1: Most KPIs will not stand the test of time
What I mean by this is that your business is going to change. It has already changed since you incorporated it.
As a result of this continual change your business will go through, your KPI’s will need to be reviewed, probably annually to make sure they are still relevant. If your business is changing rapidly you may want to review them more frequently, maybe even quarterly.
When you bring in a new member of staff, do you set their KPI’s before they start and make sure they understand them during their induction….. I’m going to take a punt and say that 90% of you watching this can’t honestly answer that question with a yes!
2: KPIs really need to be numbers
Like it or not, business is all about the numbers. The numbers tell you what is working and what isn’t. Get your numbers right and all of a sudden, business becomes easy. You are able to make great decisions achieve amazing results.
Get them wrong however, and the consequences can be catastrophic.
One of the most common mistakes I see clients make when trying to set KPI’s is they focus too much on the activity that leads to the desired outcome.
Every KPI you set for your business must do 2 things.
It must tell you if the required activities are happening within your business and also tell you if you are improving in those areas.
3: KPI’s must be properly reported
Think about how you want to see your KPI’s reported.
Keep it simple, make sure you can see all of the numbers on a single page.
Chances are, when you first start doing this, you’re going to feel like Neo when he first entered the matrix! But review them daily and you’ll quickly be able to see a detailed picture of what is going on within your business.
My favourite numbers to measure are sales and conversion related because without this key part of your business working, everything else grinds to a halt.
But to get a sale, the phone needs to ring, meetings need to happen, follow up needs to be done. All great numbers that should be measured as without any one of these working, the rest of your efforts are wasted.
For help with figuring out your businesses KPI’s and how to keep abreast of them, give me a call or ask me for help in the comments below and lets set up a
FREE coaching session
to get you and your business moving in the right direction.
Until Next Time.
Bye For Now.
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