KPIs – key performance indictors – it is all the rage in business performance improvement and management. If you can’t measure it, you can’t manage it! If you want to increase revenue, enrollment or profit you need to set the target, ensure that you can measure it and make a plan to improve it.
Setting a goal to be the best organization or business rings hollow. How are you going to be the best? Setting a profit target or goal for a surplus alone is too late. You will need to determine the key factors that influence that goal. Measuring customer satisfaction or the net promoter score alone is not enough although it is a good start.
KPI – management by the numbers, or of the numbers, is based on the assumption that correct key factors have been selected. For a private school, tuition revenue is determined by number of students enrolled and the number or type of courses. Measuring enrollment may be too late. Enrollment is determined by students returning and new students admitted. What are the factors for returning students and what are the key factors for admissions?
For service industries KPIs can be set to measure productivity well before the numbers hit your income statement and impact the bottom line. Measuring customer satisfaction after the job is complete is a start. Measuring work force utilization would be another factor that influences the health of the business. At KDI hours and billable hours are key factors. For service repair organizations the first time fix rate and SLA (Service Level Agreement) compliance are key factors in determining effectiveness, efficiency and customer satisfaction.
www.kpilibrary.com is a website dedicated to KPIs. It has articles and examples of key performance indicators across all industries and functions. Once you have reflected on the appropriate key factors for your situation you may need some help on measuring and reporting those factors.
Feel free to contact Sachin or Tom at KDI to discuss what systems you need to help you successfully measure and manage by the numbers.