Keeping Score of Your Business Performance
Why do I need to keep score in my business?
While we are busy playing the game of business, marketing, selling and delivering products to our customers, it is also important that we keep track of the key performance and results that the business or organization generates. Keeping score helps to:
a) Keep the business or organization on track towards achieving its goals
b) Keep all of the team members aware of what is expected out of them to meet the business’s goals
c) Define what are truly important, i.e. key, measures that help to steer the business.
Imagine driving a car with the dashboard broken. You will not, amongst other things, be able to know how fast you’re going, how much petrol is there in your tank and whether your engine is over heating. How safe do you feel driving this car?
What do I need to measure in my business?
Key Performance Indicators, also known as KPI or Key Results Indicator (KRI), help an organization define and measure progress toward organizational goals.
Once an organization has analyzed its mission, identified all its stakeholders, and defined its goals, it needs a way to measure progress toward those goals.
Key Performance Indicators identified by the business or organizations must have the following features:
1)Key Performance Indicators Reflect The Business GoalIf the business goal is to be “The market leader in my industry” and one of it’s objective is to “achieve a 20% growth in number of customer”, then the KPI must measure all the performance that will generate this result, such as number of prospects or leads generated from each marketing and promotion strategies, the conversion rate from each strategies, the acquisition cost per new customers, and the list goes on. Select what you’re going to measure to reflect the goals of the business.
2)Key Performance Indicators Must Be QuantifiableIf you want any performance to improve starts measuring it. If a Key Performance Indicator is going to be of any value, there must be a way to accurately define and measure it. "Achieve a 20% growth in customer " is useless as a KPI without some way to distinguish between new and repeat customers. Another key point is also to set targets for each Key Performance Indicator. Rewards and recognition can also be set based on the organization’s ability to meet or exceed the targets set.
3)Key Performance Indicators Must be Visible to team membersImagine sitting in a huge stadium with a sporting contest going on. However, you noticed that the stadium is not equipped with a scoreboard to tell the audience the score and how much time is left on the clock before the game ends. What is the score? Which team is winning? Confusion will reign. Soon, the audience will loose interest and switch off. KPI’s must be visible, just like a scoreboard in the stadium. Everyone must be able to see it, understand what the score means, and understand what needs to be done and how long they have to accomplish their task by.
What can I accomplish by keeping score?
Encik Ridzal Ahmad, Business Manager of OMNI CREATIVE SDN. BHD. Had this to say:
“ I must share this story with you regarding “keeping score”. My team and I discussed about it and we implement it!! The result is so good, for this week we already achieve our weekly target to send 10 new boxes and 10 new stickers to printers per week. Everybody in our team already collected something extra in their salary this month. I’m happy with what is going on now especially on the employee morale…you can feel the energy!! THANKS RADIN FOR SHARING THE TIP WITH ME. “
In conclusion, having a set of KPIs for your business keeps you focused, keeps the team focused and you are in better control of where your business is heading.
If you have any comments on this article, please give your reaction HERE.
Source: Free Articles from ArticlesFactory.com
ABOUT THE AUTHOR
I am an experienced manager and trainer and has a successful track record in operations management, management training and team building, both in my own companies and in the corporate market.
As an operations manager, my major accomplishments include the transfer of manufacturing operations from USA, Europe and Asia to Penang, Malaysia. I also led the development and setting up of full manufacturing and supply chain system infrastructure to support the order fulfillment processes of the transferred products.
As a Business trainer, I am an associate member of Malaysian Institute of Manage-ment (MIM) and has many years of experiences in providing training and coaching for new managers as well as problem solving and decision making techniques.
For more information, please visit: http://www.businesscoach.com.my