An Importance of KPI for an Organization to implement is a must

Sharing the knowledge of my professional expertise what had been learnt about the "Importance of KPI" for an Organization to run more successfully in achieving their goal set to harvest golden results.

Many organizations measure KPI, or key performance indicators. For some organizations, the process of measuring data serves as an exercise in futility--measuring it without using it to reach strategic goals. When used correctly, KPIs become an important part of a company’s strategy. For the small business owner, measuring the right KPIs and creating actionable items from the data can elevate a company above the competition.

Goal measurement

Most businesses set strategic goals they desire to achieve. One way to measure an organization’s progress toward achieving these goals is to use key performance indicators. For example: a company has a goal to reduce defects on its production line from 5% to 1%. In order to know whether it’s achieving its goal, the company establishes a KPI called defect rate. The defect rate KPI measures the number of defects produced before and after implementing any process improvements. Without implementing the KPI, the company would not have precise data to know if it has achieved its goal.

Vital Information about KPI

KPIs provide small business owners with an immediate snapshot of the overall performance of their business. In today’s competitive business environment, it becomes highly important for the owner to have real-time data concerning the health of the business. The small business owner should measure and track the key performance indicators crucial to the success of organization and these important KPIs provide vital decision-making information.

Education

The act of measuring KPI promotes an atmosphere of learning in an organization. According to Root cause analysis, the data generated from measuring key performance indictors fosters critical conversations. These critical conversations between an organization’s personnel typically include what the KPI measures, if the KPI is an effective measurement and achievement of the specific goal tied to the KPI. These discussions educate all personnel involved.

Continuity

Because KPIs promote long-term strategic goals it becomes important to keep the measurements consistent over time. Although a company can change its goals, the measurements of the KPI should remain consistent and for this reason, the KPIs become strategic to the company’s plan and vision.

Considerations

KPIs have a certain level of importance in an organization but only if the KPI leads to actionable steps to achieve goal. For example, a company that establishes a KPI to increase customer retention does not have a chance of reaching this goal. The goal does not have a measurable component that results in actionable steps. If the company revises the KPI to increase customer retention by 10%, it now has a measurable, quantifiable goal. The company must convert the measured, quantified data into actionable items to meet its goal.

SUNDARAMURTHY VELMURUGAN – linkedin.com/in/sundaramurthy velmurugan 299586110 LEATHER PROFESSIONAL CONSULTANT from a2z Leather Professional Consultancy, PONDICHERRY.

velvbl@gmail.com & velmurugan1959@yahoo.co.in - Whatsapp: +918973231705