Business Breakthrough – What is KPI?
by Mike J. Agugliaro
Today’s business breakthrough is about KPI. I know you’ve attended a business seminar and people keep throwing out the term KPI, which is key performance indicator, but words are nothing without action and understanding.
What does it mean? First off, you do need KPIs. You need to know what the target is you want to get to. Then you need to know the levels of that target.
In the KPI system for my business, we go by a red, yellow, green and a super green scale. It’s similar to a Gazelle’s theory. Here’s what it means: A lot of times people view hitting the green as winning, but see I expect to hit the target. Super green is when you exceed the target. If you come to work, and you’re just doing what you’re expected to do, great job you’re doing what you’re supposed to do. If you’re doing less, shame on you. But as humans we strive not to do what’s expected, but to do 10 percent, 20 percent, 30 percent above that — that’s a super green level.
So, what are the KPIs in your business? Is satisfaction or customer loyalty a KPI? Well it should be. What about culture, your employees? Do you have a KPI for that? A satisfaction, happiness meter to determine how happy your employees are? You should. And then you have revenue KPIs right? What is the target we need to hit that makes the whole earth and the business wheel spin?
Here’s the thing about KPIs, they don’t do any good on a piece of paper on your desk, or in a notebook or software system. Those KPIs have to be shared, in front of everybody and visible. Most people are visual. So you have to not only show them the KPI, but be in front of them at least once a month or once a quarter saying, “Here’s where we are, here’s where we need to go.” Only present the five most important KPIs. So many people have so many layers, and they’re focusing on all the right things at all the wrong times.
They’re focused in on callbacks. “Hey we got a lot of callbacks.” How many? “Well we got one.” What, out of 100? If you got 1 out of 100, you shouldn’t even be focusing on it. I’m not saying don’t pay attention to it or have a conversation about it, but don’t make it your level of focus.
Understand your top 5 KPI’s. The 5 that are important today may not be important 5 days or 5 years from now. KPI’s change on where the business is. Your business and your business time. So your challenge is figure out your top 5 KPIs, get them tracked, get them ready, get them out, and communicate about them. Take the time to get in front of employees and be the leader they, and you, want.
Mike Agugliaro, Business Ninja