Prime Blog

June 2011

KPIs - Why measuring is good for you

What you measure you always improve. A homily it may be but it’s a good one none the less.

I’ve got a friend who recently started logging how far he walked using a Sat Nav-based system. The package enables him to log his routes and see his progress. Once he’d set a benchmark, he was driven to do better. If you’ve ever watched those Supersize TV diet shows where the participant’s weekly intake of food is piled up Desperate Dan-style in front of them, it’s clear that the reality of consumption really hits home.

And it’s the same for business. Improvements can be made either by increasing or reducing something. The measurement of Key Performance Indicators (KPIs) helps you understand if your business is on track.

There’s nothing you can’t measure in business. You just need to work out the key things that have an influence on doing well or doing badly. So this might be hours worked and billed, sales margins and turnover generated, or less numeric-based indicators such as the strength of customer relationships and employee morale.

The important thing is to get into the habit of measuring and, crucially doing something with the information. Don’t just measure everything that’s easy and sit back triumphantly, thinking you’ve done your bit. Design your KPIs with a mind to your business strategy (in other words, ask the right questions in the first place) and use the results to either confirm that what you are doing is correct or challenge some perhaps long-held assumptions. And talking of that, I’m just off to benchmark how many beers I drank last week...

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