Every manager/leader sets certain
targets for his team to achieve. This is especially important when it
comes to business managers. To determine the progress of activities
or evaluation of tasks assigned, businesses use different indicators.
Key Performance Indicators or KPIs are one of them.
There are various types of KPIs based
on business goals, needs, and requirements. Therefore, it is
important to choose the right goals and right KPIs so that they drive
good results and prove to be effective. Now the question is how to
choose the right KPIs for the right goals?
Here’s all you need to know.
What KPI actually is?
A Key Performance Indicator (KPI) is a simple performance indicator that helps evaluate the progress of a certain act or a set goal of a company. KPIs also help in regular assessment of the performance as the team move towards achieving a goal.
KPIs are directly attached to the success of your business as they define your operational and strategic goals. Every manager needs to identify the goals of the business and then choose the KPIs that actually reflect those business goals. Collectively, these become KPI goals.
Choosing the right goals for your team
In order to choose the right goals for your team, you need to consider several things. Only then, your goals align with the Key Performance Indicators and are capable of producing desired results. Make sure you keep in mind the following while listing down your goals so that they define your KPIs:
- Have clear objectives and framework
The very first thing you need to do to
frame the right goals is spending good enough time in understanding
objectives. Having a single and main point of focus is the key.
Determine if your objectives are short term or long term.
Accordingly, you can design your framework.
When so happens, the goals you choose will definitely be the right ones.
- Select KPIs that align with your business needs
While you are shaping goals for your
team, you need to give good enough attention to KPIs, as well. Select
the KPIs that go well with your business needs and requirements. Only
then, your goals can be measured and evaluated.
For instance, it is important for an investment company to focus on different financial performance indicators, say Return on Investment (ROI). Only then, the company can set goals for the team to achieve and measure it later using ROI, an important KPI.
- Choose goals that can be quantitatively measured
Theoretically, it holds ideal to state
that quality comes first. However, when it comes to money-making,
which is a company’s major goal, a manager has to focus on that
aspect largely. That’s when quantity is involved hence, highly
The right goals are the ones you can
measure. So when quantitative data is gathered throughout, KPIs can
be implemented to know the performance.
- Goals must be concise so that KPIs are concise
Another important thing about the right KPI goals is that they must be concise. It goes perfectly well when one KPI is enough to measure one goal.
If you have different KPIs to assess
one goal, results vary accordingly, and so, it can become highly
confusing for your team. With one result driven KPI goal, it is
easier and effective to know which aspect needs focus.
- Do not always consider the ‘number game.’
Well, an argument that counters the point no. 3 mentioned above states not to always consider the number game. At times, there are certain aspects that are qualitative in nature. The right goals for your team are the ones that come with a balance of qualitative and quantitative characteristics.
For instance, it is very significant
for an ecommerce business to determine the number of visits, likes,
and online purchases daily, weekly, monthly, and so on. At the same
time, it is equally important to know if it really matters if your
number of visitors increases. Maybe improving product quality gets
more customers than the number of visitors.
- Establish goals that go with the resources
Choose and establish the goals your
team acquires enough resources to achieve. As a manager, it is
important for you to look into available resources such as IT
facilities, order deliveries, warehouses, etc. Only then, your team
will be able to work on these goals.
When resources are insufficient, the
team will face problems in completing their daily tasks. When daily
tasks are not properly managed and achieved on time, this results in
non-completion of the major set target in the scheduled time frame.
Thus, a KPI goal is disturbed, and KPI shows poor performance.
- Evaluate your team’s skills
Another significant thing you need to
put in the effort is the evaluation of your team’s skills. You must
know which member of your team is good at management, which is good
at communication, who is good at data organization, and who can lead
the team in your absence.
When the allocated KPI goals are in
accordance with your team’s innate skills, they can be achieved in
time with better results. If you ask your team members to handle what
they do not acquire proper skills for, it eventually leads to
disastrous performance for not one individual but for the whole team
and, eventually, the whole company.
So it is really important to figure out the skills your team has and allocate goals accordingly.
The Bottom Line
Focusing on these important aspects will greatly help you choose the right KPI goals for your team. In the end, these goals will prove to be easier to work on as well as achieve the desired results.