You can’t manage what you can’t measure?
Following on from my article 11th Feb, I promised to talk about how to CREATE – dashboards to show KPIs (Key Performance Indicators).
How do you gather your data? You now have an idea of your ideal measures, but is the data available? And if not, how do you gather it? Take time to identify where the gaps are and put plans in place to bridge them.
In the meantime, start with the data you have available and design your format.
What benchmarks to use?
KPIs are only useful if we have benchmarks to measure them against. A common metric is a budget or forecast, e.g., you may expect your sales to be 1,100 per year.
It may be appropriate to use multiple benchmarks such as:
· A target for sales could be 1,250 for the year.
· Compare to your sales in the prior year.
· Who are your competitors, do you know their average sales?
· Are industry standards available?
How frequently do you need the actual data?
Data becomes old very quickly, and in an ideal world I would recommend obtaining real time data, however weekly, monthly, or quarterly data may be adequate to start with. The frequency will depend on many factors including the following:
1. How quickly does the data change – and would this movement meaningfully influence business decisions?
2. Does the benefit of the real time data outweigh the cost of the work required to obtain it?
How to display your KPIs?
For some businesses, an excel spreadsheet updated periodically will suffice, while more complex businesses may require sophisticated software, considerations include:
1. Cost vs benefit – where cost is the labour time and any associated tech costs (including software, licences, consultancy for integration etc.).
2. Software integration requirements, tools such as Microsoft Power BI need to link to existing platforms holding data.
Now you have your dashboards, what’s next?
Ensure responsibility for updating the KPIs is with a reliable source, you don’t want to waste time reviewing meaningless untimely information. Ensure the KPIs are used to drive business performance and not just another meaningless report! I would recommend incorporating them into a regular review process, this would usually the management or operational meeting.