Performance Management - How Can You Gain From KPIs?

You're in business to make money. You need to make profits. You also need to generate cash. No doubt you monitor and report upon some key results - revenue, gross margin %, bank balance - that sort of thing. You probably call them KPIs (Key Performance Indicators)

But can you control these numbers? Well yes indirectly. But not directly. What you can control directly are aspects which drive business performance and therefore drive the results. Depending on your business, these are aspects such as the number of sales calls made, the conversion rates from quotes to sales, staff absenteeism, footfall (for retailers) and a host of other possible financial and non-financial measures. It's these measures of what's driving the business that are the true KPIs.

For most businesses there are 5 or 6 driving aspects that will make or break the business. Get those right and the business will succeed. But if the measures of these aspects are going south, you've got early warning to stop the whole business going south. There may be many other aspects, but typically 5 or 6 stand out.

The key therefore  is to develop a set of 5 to 6 KPIs that reflect those aspects and which you can monitor and directly manage. You will then have a small set of KPI measures which you will review at appropriate intervals of two types:

1. Key Results Metrics (KRMs) - revenue, profit and the like
2. Key Performance Drivers (KPDs) - measuring key aspects that drive the business

Many businesses do not have any formal KPDs and are therefore missing out on the business benefits from monitoring and controlling key aspects of their business.

If you would like to talk about how KPDs can be developed, recorded and reported to help you drive performance in your business, do contact me at Camwells on +44(0)1628 632914, or remove spaces to email challisc @ camwells.co.uk



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