Measuring the progress of your business is a challenge that many companies avoid monitoring. According to studies, almost half of all organizations have no metric to measure their business growth. With a developed system for monitoring progress and identifying weak points, it is possible to measure business transformation and achieve greater success. In this article at Key Performance Indicators, David Parmenter explains how KPIs can transform your business.
Why are KPIs Vital?
Employee motivation and job satisfaction are crucial to boost organizational performance and culture. Setting interim KPIs will be rewarding and motivating for employees. The results are often constant. It creates a sense of purpose and keeps them focused on meeting their goals. A sound KPI system will provide you with employees’ actions and progress, discuss their findings, provide feedback, and ultimately increase job satisfaction.
Increase Revenue Growth
Sales growth is one of the most basic indicators of any business’s success. Calculate the revenue growth in three simple steps.
- Subtract the previous period’s revenue from the current period.
- Compile your income reports from one period to the next.
- Divide these numbers by the total of last period’s revenue.
Negative growth suggests taking corrective measures. For example, if the report indicates that customers are not interested in buying your product, you must change how you approach clients with your products/services.
Create a Sense of Ownership
“Performance measures communicate what needs to be done, and help staff understand what is required,” says Parmenter. The right KPIs enable leaders to let the staff make decisions to ensure progress. This delegation of authority to the front line is the foundation stone of KPI methodology.
Create an Atmosphere of Learning
KPIs can create an educative atmosphere within your company. If you notice any unfavorable reading on the KPI, you have the chance to talk to the individual or the team involved with that KPI. The metrics allow you to teach the employees how to do tasks differently and perform better to reach organizational goals.
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