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Key Performance Indicators (KPIs) present a tremendous opportunity for growth on the individual and company level—but oftentimes, they take work. KPIs are not usually a part of annual performance reviews, but rather are a regular way to track an employee, a team, or a company’s progress weekly or monthly. So, why invest the time into tracking something you believe you can see play out in front of you day by day? Well, KPIs are not going to tell you the result of a goal. Instead, KPIs tell you how you got there. If sales are low or attrition is high, for example, KPIs will offer an explanation. And the benefits go beyond that—here’s how your company can benefit from monitoring KPIs.
Strengths and weaknesses can be understood through various KPIs. For an individual who is unsuccessful in increasing their client base or daily call logs, understanding where they excel and what needs improvement will be very straightforward. Perhaps someone who arrives at the office late after making visits to clients sees a drop off in returned phone calls compared to their colleagues. In a broader sense, using KPIs to debrief after a project gives a team an explicit understanding of what went well and what didn’t, making it easier to replicate successes and reduce failures by removing processes that don’t yield results. With respect to clients, some companies find it helpful to use feedback from their customers as an indicator of their strengths and opportunities.
We know that employees value feedback—millennials more so than most other generations. They are a group that thrives when expectations are clearly set. By outlining exactly what is expected of a person in a particular role—and what it takes to grow beyond that role—managers create a realistic roadmap toward success. KPIs help to manage with more objectivity. If everyone in a role is given a clear directive, it removes some of the personal nuance that comes with evaluating an employee’s performance. It also sets the standard for appropriate compensation. Teams who know they’re being evaluated on the same criteria are likely to be more engaged with their work and form stronger bonds amongst themselves.
The Human Resources department is the nucleus of any company—they make sure people are paid properly, treated fairly, and understand company policies and restrictions. But, HR managers often spend a lot of time playing catch-up if and when there is an issue with an employee or if it’s time for someone’s annual review. Addressing an underperforming employee becomes more manageable when HR knows both the expectations set for an employee, as well as their knowledge of the expectations. Tracking employee expectations through KPIs ensures that disciplinary issues comply with company policy and labor standards. During annual reviews, knowing the benchmark at which raises and promotions are given allows an HR manager enter into a meeting confidently knowing where an employee stands and why.
Remember the strengths and weaknesses you learned about through KPI tracking? Here’s where they come in handy. Having data to present to prospective clients that backs up a company’s claims to their expertise or success instills confidence among leads who may be wavering in their decision because it is tangible proof that a company takes its work seriously and is more than just great marketing.
When budget time rolls around for each department, managers need a clear understanding of their inputs and outputs. Using KPIs to demonstrate areas that are over-performing and other areas that are spread thin with too little staff or money make a credible case when proposing an increased budget. On a company-wide scale, CEOs and Presidents of companies can use KPIs from each of the business’s departments when seeking more funding, either from current or prospective adventures. By painting a picture of what the company can achieve with a set of resources and how more of these resources will expand the scope of value of their work, investors can plainly see a detailed report of how their money will be used in current and future projects.
Tracking KPIs doesn’t need to be a huge project or take a lot of time and resources. Whether you’re using a CRM or tracking your metrics on Excel Sheets, integrating your reports on metric tracking software can make a world of a difference. With metrics that update automatically and goal progress shown in real time, individuals and teams can use these key performance indicators to improve progress and time spent on activities. Being able to literally see which metrics need a little more work versus which metrics could be spared for the time being gives you more clarity and lets you work toward the bigger goal.