KPI – three magic letters that can make the difference between success and failure for a business. Key Performance Indicators are how most businesses measure the achievement of their staff and keep their business bank accounts in the black. Used effectively, they are the backbone of a strategy that leads to success; so why do so many businesses set KPIs that are arbitrary, ill thought-out and lead their staff to the Career Opportunities page of their competitor’s website?
The secret is to set KPIs that are actually realistic – for your organisation and for your colleagues – put in place a strategy, and measure its effectiveness as your organisation heads towards achieving its aims.
As with nearly every factor that contributes to success in business, it comes down to understanding your organisation’s market, as well as your organisation’s position in the market and how your organisation came to be in that position. This is information that needs to be understood by the people setting the target – the KPI – as well as the people expected to hit the target. This is an aspect often over-looked by the KPI setters of this world – clear communication unsurprisingly is important, but unfortunately quite often lacking (another article for another day).
Of course, it’s all very well having big goals and fluffy statements of intent, but are they achievable and, if so, how are you going to make them happen? Take the example of a Care Home or an organisation whose admissions rely heavily on a nearby catchment area. Is it realistic that your Care Home could add an extra fifty residents in the next year? Maybe it is – then it’s time to put in place KPIs that will let you know when you’re on the way to hitting your target.
Planning KPIs may go something like this:
- What’s the desired outcome? Fifty extra residents in accommodation by the end of the year (you may want to specify the type of accommodation, private or publicly funded etc..)
- Why? To improve the Care Home’s profitability
- How will we measure progress? We’ll analyse admissions enquiries and conversion rates
- What will influence the outcome? A solid marketing strategy – communicating effectively with the target market and a robust admissions process to convert enquiries to acceptances
- Who’s responsible for this outcome? Senior Management and Marketing teams
- How will we know when our outcome is achieved? Fifty additional residents added to the register for the next year
- How will we keep track of progress towards our goal? Monthly analysis of admissions data and adjustment of marketing and communications strategy (and possibly budget) to suit
This is simplistic of course, but there is a thought-process behind all successful KPI setting. Get it right and a winning strategy will be formed around it.
To get the ball rolling, DDI can help you find out more about your organisation’s market and its position within it, as well as how it came to be there and where it could realistically be in the future. Our business experts can even assist you as you set your KPIs, put in place a workable marketing and business strategy and measure your progress as your organisation heads towards kicking those goals.