Monday, August 30, 2010
Monday, August 16, 2010
Promote KPI Data Within The Team
Over the last several weeks, we have been discussing the characteristics that make up a good Key Performance Indicator. Now that we know how to create a KPI, let's discuss collecting the data for and managing your new monitoring system.
It can be very useful in promoting company policy and getting buy-in to make sure team members see some of hte data that is being gathered. This can be done in the form of a scoreboard for example. This chart or handout can show the numbers that drive business profitability-sales, Cost of Good Sold,etc.-and the KPIs for the critical success factors in each area. Some companies even include the team's bonus evaluation forecast based on the up-to-date KPI indicators. This can prove to be a highly motivating measurement tool.
Providing the scores and explaining the situation is one way of keeping them focused on the jobs that really need doing and encouraging them to move the KPI's in the right direction.
Of course you may desire to do some training around this. Some team members may not be familiar with such terms as "operating efficiency", "turnover", or "gross margin" without some type of explanation. After they become familiar with the terms, and have the data made available to them, you can ask them to discuss ideas on improving the situation.
For more information about knowing what to do with the KPIs once developed, please contact a Simons Bitzer team member at (317) 782-3070.
It can be very useful in promoting company policy and getting buy-in to make sure team members see some of hte data that is being gathered. This can be done in the form of a scoreboard for example. This chart or handout can show the numbers that drive business profitability-sales, Cost of Good Sold,etc.-and the KPIs for the critical success factors in each area. Some companies even include the team's bonus evaluation forecast based on the up-to-date KPI indicators. This can prove to be a highly motivating measurement tool.
Providing the scores and explaining the situation is one way of keeping them focused on the jobs that really need doing and encouraging them to move the KPI's in the right direction.
Of course you may desire to do some training around this. Some team members may not be familiar with such terms as "operating efficiency", "turnover", or "gross margin" without some type of explanation. After they become familiar with the terms, and have the data made available to them, you can ask them to discuss ideas on improving the situation.
For more information about knowing what to do with the KPIs once developed, please contact a Simons Bitzer team member at (317) 782-3070.
Monday, August 9, 2010
KPIs Should Allow for Correction
We have been discussing the traits that make up a good set of Key Performance Indicators. Today, we'll round out the conversation with the fourth and final characteristic of a good KPI. It should point to the activities you might need to alter if things in your business start to veer off track. To recap, KPIs are the measures of the processes and financial markers that are critical to the success of your business. You know you are on track to achieving your objectives when they are moving in the right direction. You also know that you have an issue to address when they move in the wrong direction.
Your KPIs ought to point to just what is contributing to the problem so you can make changes in a timely manner. For example, you may decide you have a problem with cash flow, but is it die to slow paying customers, poor internal cash management processes, not enough sales, or some combination of those? To determine this, you will actually need to drill down just a bit further by creating a system of sub-system KPIs. When it comes to targeting areas needing correction, it is necessary to take this more granular approach to track in detail what is going on in individual areas.
For more information about establishing and monitoring a set of Key Performance Indicators for your business, please contact a Simons Bitzer team member at (317) 782-3070.
Your KPIs ought to point to just what is contributing to the problem so you can make changes in a timely manner. For example, you may decide you have a problem with cash flow, but is it die to slow paying customers, poor internal cash management processes, not enough sales, or some combination of those? To determine this, you will actually need to drill down just a bit further by creating a system of sub-system KPIs. When it comes to targeting areas needing correction, it is necessary to take this more granular approach to track in detail what is going on in individual areas.
For more information about establishing and monitoring a set of Key Performance Indicators for your business, please contact a Simons Bitzer team member at (317) 782-3070.
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