The Importance of Company Research in the Development of KPIs

When it comes to the development of KPI, or key performance indicators, there is a need for the company concerned to do a certain amount of research. This has to be done so that the proper identification of KPIs can then be facilitated. After all, it would be the organization itself that would be affected by the implementation of the balanced scorecard, which would contain the KPIs identified, right? Thus, it would be better to go about the process the right way, so that only the proper KPIs would be identified and then plotted out onto the balanced scorecard to be used by the organization itself.

Let us go back to the very first step in building an organization or company. When your organization is done analyzing its mission and vision, and it has identified all of the possible stockholders, then the next thing to do is to analyze what goals and objectives it wants to achieve. These goals and objectives would surely be both short-term and long-term. To check on the progress of the organization towards the achievement of these goals and objectives, it would be better to implement a systematic way to measure such progress. Here lies the importance of KPIs.

KPIs are the quantifiable measures that reflect CSFs or critical success factors of a business or organization. Since companies have different needs, goals, and objectives, then it is inevitable for KPIs to be different as well. Yes, they would still be different between and amongst companies that belong to the same industry. This is simply because no two or three companies would have the same needs to attend to and the same goals to achieve. Thus, there would be inevitable differences in the KPIs that companies would make use of. The underlying principle would always be the fact that the KPIs would depend on the very nature of the organization. For the typical school or university, a useful metric would be the rate or number of graduates per academic year. For a call center, a key metric could be the AHT or the average handling time. For the typical business, one of the key metrics could be the number of return customers, or even CSAT or customer satisfaction. Now, with this last metric, you could very well say that this can be used by both the business and the call center, simply because there are customers to satisfy in the process. However, this is the classic example of how companies have different needs. The way the typical business measures CSAT would certainly be different from the way the call center measures it. Thus, it is important for the KPIs to reflect the nature and the needs of the organization that they work for itself.

The only way to do this is to analyze the nature, needs, goals, and objectives of your organization. This way, you can choose the most appropriate KPIs to use for your company. And this entails further research into the matter. This is precisely why companies need to do extensive research when they are in the process of developing the KPIs to use for the BSCs.