Key Performance Indicators (KPIs): What are they? And why do I need them?

The principle “what gets measured gets managed” dictates that by examining a process, you can not only better understand it, but you can also find ways to improve it or get back on track if you know in advance when you are off course. KPIs help you measure strategic, financial, and operational performance compared to a set of targets, objectives, or industry benchmarks. However, many SMB leaders only focus on KPIs that measure business outcomes, which means they only know if they missed the target after it is too late to course-correct. Business outcome or lagging KPIs are essential to understanding performance; however, you create a framework to measure agility and continuous process optimization by tracking leading indicators.

Using a framework that delivers a combination of outcome and leading KPIs will help you not only track financial performance but also:

  • Focus and motivate employees to deliver results or solve critical problems.
  • Reinforce your business vision and customer promises.
  • Provide an early warning system that reduces risk.
  • Foster innovation and growth mindset, data-driven culture.
  • Drive continuous process optimization to not only reduce costs and improve margins but also remove friction points and create optimal employee, customer, and vendor experience

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