Business leaders are responsible for managing teams across multiple departments within the company. Marketing leads, sales goals, and other profit margins must be established or maintained. Without Key Performance Indicators (KPIs), evaluating progress is nearly impossible.
KPIs Are Quantifiable
Key Performance Indicators are essential because they provide measurable data. Success depends on the ability to monitor priority metrics consistently. People managers will find it difficult to lead staff without first establishing measurable goals. Likewise, employee evaluations must include quantifiable statistics. Managers and leaders can only effectively coach to data that has been recorded, delivered, and compared to other relevant statistics.
Learning vs. Doing
Learning tools are an essential component for every employee who seeks promotion or advancement. In addition to excelling in their current role, motivated employees also strive to learn more about other positions and operations within the company. Key Performance Indicators allow managers and employees to cross-train within their department.
By understanding the KPIs required for other units, employees can prepare themselves for a lateral or advanced position. Without clearly defined KPIs, employees may complete routine tasks without any real understanding of the big picture. Employees who are not measured and motivated are not challenged to their full capacity. The result is frustrated managers and lackluster employees, neither of which are likely to enjoy a high level of job satisfaction.
Sustainable Growth Factors
Businesses planning for significant growth, whether organic or through acquisition, must rely on accurate research to confirm their readiness. The external analysis may include valuation reports, financial leverage, and public relations. In comparison, internal research must include a review of current KPIs and human capital. Employees should be in the right seat before the move or accelerated growth.
If Key Performance Indicators are not established or properly evaluated, they could mislead decision-makers. Unmeasured or irrelevant statistics are easily manipulated and misinterpreted, a severe detriment to business leaders who are depending on this data to make sound decisions on behalf of the executives and owners.
Among essential business functions, KPIs rank within the top three. They can and should be used within each business operation level and provide useful feedback for employees and managers. Key Performance Indicators provide a specific standard, offer guidance, and display measurable results.