During the holiday season business owners and managers tend to reflect upon the past and set goals for the future. Critical to the success of any business is the ongoing progress towards achieving these goals.
Key performance indicators (KPI’s), both financial and non-financial, are often used to monitor results and provide feedback for decision making purposes.
Choosing and using KPI’s involves the following questions:
- What makes a performance indicator “key”?
- How to measure and report on the KPI?
It is important to achieve a balance between the financial and non-financial KPI’s. Financial KPI’s tell us what has happened, whereas non-financial KPI’s typically tell us what will happen.
The following tips may be useful when choosing and using KPI’s:
- Link to your goals
- Define clearly
- Must be relevant
- Capable of being measured
- Update as your goals change