How to Set KPIs

07/12/2023 | Inspire Results
KPI Key Performance Indicator for Business Concept

It’s common for small businesses not to clearly lay out standards for their work processes. Why? Because they’re small, they’ve grown organically over time and achieved success without clearly defined standards. However, once a small business reaches a certain level of growth, the owner no longer has time to monitor every activity to ensure success. That’s where KPI metrics come into play.

What Are KPI Metrics?

Key performance indicators (KPIs) are metrics used to measure and track the success of an organization’s operations. When used correctly, KPIs are a valuable tool for businesses to assess their performance and ensure they’re on track to meet goals.

Why Are KPIs Important?

KPIs provide your employees with a quantitative measure of performance metrics to compare results to benchmarks. They also provide insight into the effectiveness of processes, systems, and strategies.

For example, let’s say two of your sales reps are in conflict over messages or scripts they use to close deals. Since your company doesn’t have standardized sales messaging to pitch your products and services, these two reps developed their own and believe that their messaging is the best way to make the sale. Both employees asked their supervisor which script performs better. Because their team lead wasn’t sure, the conflict escalated to you—and since you didn’t develop a standard pitch for your sales team, you don’t have proven sales messaging to offer as a solution. That’s just one demonstration of why KPIs are important.

Pure and simple, KPIs let you and everyone else know if you’re reaching your goals or not.

Achieving your sales goals can be a daunting task, but you can do it—with the right strategies.

How to Set KPIs

Define Relevant Objectives for Your KPIs

Before setting KPIs, define your business objectives.
  • Establishing and sustaining productivity
  • Attracting and retaining customers
  • Developing a memorable brand
  • Reaching and growing an audience through marketing
  • Planning for growth
Once your objectives are set, you can use your culture statement as the foundation of quality standards for your organization.

Start Setting Standards

After you’ve ensured your objectives are defined and aligned in your culture statement, start setting standards. To get started, look at your company’s levels of performance, such as customer service, cleanliness of equipment or workspace, quality of the product, and quantity goals. Setting standards is sometimes not an easy thing to figure out—you may have to start with one and see how it works out and how your people feel and react, making adjustments over time. You should also consider asking your employees their opinion about what the standard should be for the work they do. But at the end of the day, you have to take ownership of your own expectations.

Make Sure Your KPIs Are Well-Defined

Next, paint a picture of your standards with well-defined KPIs that are:

  • Well-researched and based on feedback from analysts, managers, and department heads
  • Comparable, meaning progress can be easily tracked over time
  • Well-targeted, meaning they measure exactly what they’re supposed to
  • Straightforward and precise

Communicate

KPIs are useful if they’re clear, concise, and easily understood by all relevant parties. It’s important to always provide context to your employees and stakeholders about your relevant standards as often as possible. Make sure to discuss why you’re measuring which particular metrics in meetings verbally and in writing over email or messages.

How to Track KPIs

Review KPIs Regularly

After you’ve defined your KPIs, it’s essential to track your progress against them on a regular basis. This can be done on a weekly, biweekly, or monthly basis, depending on the type of goals you want to set and measure. When reviewing your metrics, make sure to include relevant teams and departments, giving everyone a chance to review the numbers together and provide feedback. If some KPIs seem to be unattainable, decide they’re completely out of reach or simply a challenging goal that can push teams to explore their limits and learn new skills.

Update Your Objectives

As your business grows and changes, your KPIs will too. The challenge is to keep them relevant to your current objectives. Certain metrics may become more important than others, while some may become completely negligible. The key is to regularly adjust and update your KPIs to align them to the strategic goals of your business.

Key Takeaways

  • Key performance indicators (KPIs) are used to measure and track the success of an organization’s operations.
  • KPIs provide your employees with a quantitative measure of performance metrics to compare results to benchmarks.
  • Before setting KPIs, it’s important to define your business objectives.
  • Well-defined KPIs should paint a picture of your standards.
  • KPIs are useful if they’re clear, concise, and easily understood by all relevant parties.
  • After you’ve defined your KPIs, it’s essential to track your progress against them regularly.
  • Make sure to change your performance metrics as your business grows.

Helping You Set KPIs to Achieve Success

At Inspire Results Business Coaching, we provide proven coaching methods that help you set standards for your internal processes. Our team of coaches work alongside you to develop your objectives, set standards, and track your progress as you go. When you partner with us, we help you create and improve your operational systems, safety and security, quality systems, and more. Contact us today to learn more about our business coaching services.