Why KPIs are crucial for business growth in 2021
Amid all the world's changes, one thing remains constant in the business realm – competition will always form the backbone. Setting out clear key performance indicators (KPIs) is an essential step to business planning as they ensure that business objectives are met, and these objectives drive all decision-making processes. As we start a new year, you may have already reflected on the previous year's challenges, changes, and opportunities worth tapping into in 2021.
We are still learning to navigate our new norm and adjust to the tumultuous times we find ourselves in. It is the best time to set out new targets and KPIs to improve the management and tracking business performance. As aptly stated by management guru Peter Drucker, "what gets measured, gets managed". Keeping your KPIs updated is key to staying on the pulse of what's happening in your organisation and, ultimately, impacts your bottom line. Staff performance is critical to the growth of an organisation, and KPIs play a key role. If you weren’t motivated previously to focus your energy on KPIs, you will be encouraged to take this part of your organisation to task by the end of this article.
What gets measured, gets managed. - Peter Drucker
KPIs are crucial for personal growth
Maintaining a motivated and constantly growing staff is crucial for ensuring efficiency and productivity during working hours. Humans have a natural inclination to want to feel as though they are good at something; success in one area can often motivate an employee to go further and excel. With KPIs, teams can see exactly how they are performing at any given moment. There's no reason to wait for the end of the quarter or for a project to tabulate results, KPIs are current and something to regularly look back at. KPIs enable your staff to set goals for the week, month, quarter, and possibly the whole year.
Allowing employees to monitor their performance and responding straightaway means that they are more likely to achieve their goals and better understand how to do so in the future. Not every campaign or product update will reach its targets; however, monitoring performance against those targets, be it good or bad, creates an environment of learning, and encourages ownership.
KPIs are a more tangible way to manage performance
A motivated workforce, office culture, and capacity all contribute towards successful performance. This is the most important reason why KPIs are a vital component of any organisation. However, KPIs take this a step further, they simplify performance management and create transparency. This allows staff members to keep track of their progress as well as the progress of those around them, as well as the wider business performance. KPIs enable staff members to be aware of any shortcomings, so they can better work together to aid these
It ultimately improves lines of communication as everyone is on the same page. Moreover, there is a clear understanding between employer and employee, enabling the employer to stay on the pulse of any changes in staff performance and find solutions to these where possible. In essence, tracking your KPIs is a more transparent way to increase accountability.
A better way to measure growth and progress over time
If you're in a sales-focused environment, KPIs are crucial to tracking results on key elements such as revenue, gross margin, and the number of employees vs the workload. Setting targets is always good business practice; however, those are pointless without KPIs to track to know if they are being met.
Spacing out your KPIs to measure growth weekly or quarterly helps you measure your progress as well as your business' long and short-term goals. Your KPIs are the key indicator of how effective your business strategy is. They also keep you in touch with everything so you can immediately spot any changes that may impact revenue before it's too late. KPIs can be compared to a crystal ball – they give you the lens you need to see as far ahead into the future and be aware of the present. They let you know if you are on track to achieve the results you want.
A great way to problem solve and take advantage of other opportunities
Whether you're looking to boost revenue or staff morale, setting the right combination of KPIs can help you get out of a sales slump and turn the tide. You can reposition the team to meet the set goals. Under more pressing situations like boosting revenue, some KPIs will have to be set weekly, allow you to check in regularly to determine if the current strategy is working or if you should re-evaluate your approach. You can use your KPIs to identify new opportunities and test your business model against these. The possibilities are endless.
The benefits are endless
It's easy to sing to the KPI tune, and with good reason. KPIs are incredibly beneficial to the company's growth, boosting staff morale, manage performance, and tackle new opportunities. KPIs are similar to the data you need to make better-informed business decisions – and we all know in business, data is gold! As we settle into a new year, reflect on the previous year's KPIs for a clear view of what worked and what can be improved going forward. This will be meaningful to your bottom line.
Want to know more about how Sontai can help your business create dashboards and reports that can help you manage your business KPI's? Get in touch today for a Free Consultation.