By Rumzz Bajwa, Digital Strategist and Content Marketer, Giggle Finance
You will never know whether or not your business is thriving or heading in the right direction unless you measure the effectiveness of the strategies you implement. Key performance indicators or KPIs are essential in measuring your organization’s efforts in achieving its goals. While KPIs will depend on your objectives and things you want your company to accomplish, KPIs are essential in assessing the progress of your business and all the people who are involved including employees, customers and stakeholders. Here are 6 KPIs for monitoring the success of your business.
1. Productivity
Productivity refers to the outcome of your resources versus the input. Find the output for every unit of your employees’ input. You can measure this by determining the revenue per employee; the ratio of your revenue per employee to the average salary of your employee will provide you with the productivity ratio for your company. This can be done by identifying the number of projects that have been accomplished per employee.
This KPI will give you an idea about the level of productivity of your employee and whether or not they are contributing to your organization’s progress. To help improve the efficiency of your employees, there are online course platforms available for honing their skills and developing their talents.
2. Customer Satisfaction
Since one of your organization’s main objectives is to make sure that you are serving your clients and customers each day, you will need to measure customer satisfaction as well. You can determine if your customers and clients are satisfied through surveys. In determining customer satisfaction, you will need to multiply the total point from the survey by 100 then divide it by the number of questions. The result will give you the satisfaction rating from your customers and clients.
With this KPI, you can identify if you are able to meet your customers’ expectations. It will give you an insight into what else you need to do so you can improve your service.
3. Time
This KPI determines the time that has been taken from the beginning up to the end of a project. This is also referred to as the cycle time. Regardless of the scheme, there is a standard benchmark of cycle time being followed to measure this KPI. If you have a shorter cycle time, it will translate to a faster return on investment to your organization as you also make plenty of room for more projects to undertake.
Time allows you to measure the efficiency of your employees. It provides you an overview if your employees are doing their job accomplishing a project on the required turnaround time.
4. Cost Efficiency
Cost Performance Index is the KPI that provides you the ratio of the value that your organization has earned and the cost you have incurred to obtain such value. With this KPI, your organization can reduce the financial risk involved by making sure that you are handling your capital cost wisely.
This KPI helps you to improve your ability to keep your finances in check.
5. Alignment with goals
Alignment ratings help you determine if the projects you and your employees have accomplished are right for your organization. By conducting a survey participated by project managers, leaders and business managers will help you to get your alignment ratings. It will be easier for you to reassess the strategies you have implemented.
6. Return on Investment (ROI)
Your return on investment can be calculated by dividing the total benefit by the total cost and multiplying it by 100, expressed as a percentage. This KPI measures the return for every dollar you have invested. Benefits include cost savings, profits and increased outputs in dollars. Costs may consist of travel expenses, cost of design, cost of resources and maintenance of a project.
Importance of KPIs
When tracing your business, you should take the pulse of your KPIs because it will help you stay informed about the next step you should take to make sure that your business is not only surviving but also thriving. KPIs give help you to stay informed so you will know if you need to broaden your horizon or rethink your strategy.
These metrics allow you to do the following:
- Assess customer satisfaction
- Determine your organization’s strength and weaknesses
- Identify the organization’s areas for improvement
- Evaluate the success or effectiveness of your strategy based on these key metrics
- Find out if you are on the right track when it comes to reaching your company goals.
The Bottom Line
Keep in mind that if you cannot measure it, you cannot manage it. When setting your KPIs, make sure that it is relevant to your business and it plays a critical role in an organization’s overall success. KPIs should help you grow your reputation, exceed your current performance and help you make better decisions.