My first lesson learned in the early 2000’s measuring business performance was a true KPI had to answer the question, “Why does this matter?” Specifically, while pretty much any business process can be measured and reported on, KPI’s can tell business managers what to focus on and change mid game to better improve bottom line results.
A key to selecting KPIs is to first understand how they’re different from metrics. Both have value; metrics, which can be either lagging or leading, measure results as opposed to KPIs, which are always leading indicators, measure those activities that drive the end result.
Think about it this way: when reviewing a quarterly P&L you notice that monthly parkers have dropped year over year. This drop is a metric; it’s a historical fact that’s reported on after month close. To improve monthly parker volume you set a target for the Monthly Parking Specialist to make three sales calls each month for the next quarter to tenants within the building to meet a new parker target of 36 new accounts by quarter end. Monitoring the sales calls and new account sign ups are the KPI’s – these measures indicate within the quarter what the end result will likely be, providing the opportunity to monitor and adjust the plan accordingly so meeting the overall goal is much more predictable.
To evaluate if your KPIs are delivering the value you intend, check the following:
