KPIs – What’s Driving Your Business?

Sit down for your weekly business review and there is likely to be a page or screen full of numbers like revenue, order book and profit.

These are measures of results. But are you measuring what is driving your business? These are the true Key Performance Indicators (KPIs), or better called Key Performance Drivers (KPDs).

Depending on your business, these might be sales calls made, quote conversion ratio, credit notes, footfall, or staff turnover for example. Within business operations, there may be a whole set of performance measures like pickups per mile, absenteeism and success/error rates.

As CEO, it’s useful to consider the six top aspects driving your business that if measured, monitored and controlled will mean the right results will inevitably arise.

The same principle can then be applied to each director, and each manager across each aspect of the business. This hierarchy can be extended down as little or as much of the organisation as is relevant.

But it’s important to get the right measures to ensure they truly drive improved business performance. Ratios can be a real issue. For example revenue per employee will tend to arbitrarily drive down employee numbers rather than drive up revenue. The measure will encourage paying to automate or outsource activities that may actually be cheaper to do manually or in-house. There has to be a balanced set.

So what KPDs do you need to help drive your business in the right direction?

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