Success, in any industry, relies heavily on the ability to create and define strategic and operational goals. This means measuring and gauging performance over time, hence the importance of key performance indicators. So, knowing this, how do you evaluate your budgeting and forecasting process? What are you, or should you be measuring? What performance benchmarks have you set, and are you meeting (or exceeding) them?
KPIs are, for many organizations, inherently challenging. Why? For several reasons. Here are just a few – and some of the best ways to overcome them.
Challenge #1: Selection. One of the biggest challenges with regard to KPIs is selection. With so many different KPIs to choose from, some so similar in their make-up it is difficult to identify the difference, sometimes choosing a broad indicator seems the easiest route to take. In the end, that selection becomes the problem. Carefully assess your goals and set specific KPIs based on those goals. Also, avoid setting too many. If you go a little KPI crazy, employees will become overwhelmed and confused, and instead of hitting their targets will become overextended and none of the goals will be met.
Challenge #2: Measurement. What and how are you measuring? Where are you getting your numbers from? KPIs require accurate data. Once you’ve set a KPI, you need to be able to measure it – otherwise, what is the point of having it in the first place? After all, if you don’t know where improvement is required, how can you implement a strategy to improve? One of the biggest roadblocks here is inaccurate or outdated data. This often comes as a result of a decentralized system. By automating the collection and merging of data, as well as simplifying the receiving process, you can be sure that the data you are using to measure your success is both accurate and timely.
Challenge #3: Communication is key. As mentioned, often companies set generic KPIs, sometimes based on careful analysis, sometimes not, but employees fail to adhere to them or simply ignore them altogether. Often this comes down to a lack of communication. Employees are aware that they have benchmarks, and what they are, but simply don’t know why they need to meet them. Clear communication and a better understanding of how those benchmarks impact the company as a whole can make a big difference.
At True Sky, we know how important those KPIs are, especially when it comes to your budgeting and forecasting process. Want to get a strategy in place to make setting and measurement simpler and more cost effective? Get in touch today: 1 855 878 3759.