The CEO’s support and encouragement are vital to enable a culture of successful KPIs for its business. Just think about it.
Many individuals believe that financial measures are the ultimate in creating KPIs for your business. How many times do we hear – did we meet our sales goal, how come the gross profit is not better and why are we over budget on these and those expenses? If I hear those comments one more time, I give up. CFOs are excellent at developing financial reports that highlight shortfalls. They make a living at pointing out others’ shortcomings.
KPIs are not to be used as a financial report card to indicate failures. KPIs are an empowerment tool to help you build an organization that stretches, grows, and optimizes its performance.
What do I mean?
Annually, most organizations sit down, take an inventory of its competitive position, and set a strategy for the future that builds upon its strengths and shores up or makes inroads against its weaknesses. Conducting a SWOT analysis can quickly jumpstart this activity.
I say most, yet many companies will determine they do not have the time to undertake this important activity – I am too busy working in my business, putting out day to day fires and just completing current tasks. Then they wonder a year from now, why they have not made much progress and even may have fallen further behind its competition.
This condition is when leadership steps in, to develop the discipline to organize annual planning that is transparent to the entire organization and establishes a KPI reporting system that empowers the organization to work feverishly to achieve these goals.
Here is a brief outline of an approach
- Perform your SWOT analysis
- Set your 12-24 month strategy
- Develop your SMART goals to set the course to reach these objectives
- Establish the critical organization-wide KPIs
- Cascade the KPIs by department/function or operating unit
- Communicate to the entire organization your game plan for the year.
How long will this take?
Not to be funny yet to get it right it may take years. Each year we will get a bit better at developing our SWOT, business strategy, SMART Goals, and KPIs. With any innovation, do not expect miracles right out of the gate. The best companies have been working on this for years, and they get a bit better each year.
Finally, it takes commitment and discipline. Without these two indispensable ingredients, many a wheel will spin needlessly, and your competitive profile will erode over time.
For those who respect sports, it is often challenging to catch up late in the game!
Now, ask yourself..Am I a Leader?
