2020 has been in an unprecedented year in many ways. As it draws to a close, it is time for businesses to take stock and align their KPIs for 2021. This is the time when you need to start analyzing overall business performance from multiple aspects and get to the root of what worked for you in 2020 and what didn’t. It’s only then that you will be able to create truly effective KPIs for the next year.
Identifying the right KPIs is the key to ensuring success at all levels of your business. From meeting day to day production targets, quarterly sales, or annual revenue, you can define KPI reporting for any process, department, or role. It is essential that KPIs align with your business objectives and clearly communicate the progress of your business. Your KPI reporting should empower your employees to access key insights in real-time and make informed strategic decisions instantly.
Let’s take a look at some of the key areas where KPI reporting plays a critical role in improving business performance and the benefits that it brings to the table.
Measure Outcomes Instantly
Immediate access to the current KPI measures give you accurate information on the progress and likelihood of success. You can track and compare performance across KPIs and monitor your progress. You can identify the gaps and make informed decisions on what to change and how to ensure that all KPIs are met successfully.
KPIs are always tangible and quantifiable, hence KPI reporting delivers actionable insights to you. You will immediately know about how a product will sell tomorrow or in the next week, how you need to change the pricing or discounts or how much stock you need to procure for the upcoming festive season.
Realistic Goal Management
Employees are always keen to know how they’ve performed and what they can do better. Giving them clarity on their goals and expectations through KPI reporting makes the whole process extremely transparent and objective. Your team can maintain their own track, know how they are faring on the goals set for them and are able to translate expectations into actual KPIs.
A clear, well-defined vision of their role and the larger business objectives ensures that the teams do not work on assumptions or personal notions. Everything is visible, accessible to them in the form of KPI dashboards and they are well equipped to work in tandem with each other.
Strategic Budget Planning
KPI reporting provides clear insights on budget consumptions, under-utilized funds and leakages. With access to correlated insights from all departments, locations etc. senior management is well equipped to plan the budget for the next year. They can look at the forecasts given for each category and department and plan how they should realign budgets. With insights on leakages (over resource allocation, delays, etc.) they can also plan for corrective measures to control revenue loss due to leakages.
How should you set your KPI Reports?
Identifying the right KPIs and creating relevant reports around them is extremely critical for a business. Here are some best practices that you can follow to utilize your KPI reports in the most effective way:
Define Goals and Timelines
For any process or person, you can set as many goals as needed, but each goal should have a deadline. You can create smaller milestones to track the progress of the goal versus the time. This way you will be able to easily understand how many goals are on track and what needs to done to improve off-track activities.
KPIs help you to break down complex business objectives into smaller, understandable goals that each and every member in the hierarchy can relate to. Further, constant communication of KPI progress to everyone through KPI reporting and dashboards helps in keeping everyone aligned towards business goals.
Incentivize Your Teams
You can consider linking KPIs to some sort of incentive or recognition. Your teams would be able to see what all they need to accomplish to meet a certain milestone and the recognition that they will get. You can map scorecards or digital badges to performance KPI dashboards to keep your team motivated while having instant access to their current performance stats.
Don’t Miss the Gaps
When a business sets up KPI reporting, they get to analyze past and current data and also correlate trends in this data. Mostly this analysis will unravel gaps that need to be addressed by the business while they plan their next set of actions. Businesses must take KPI reporting as an opportunity to identify the gaps that exist in their processes and rectify them, again in an insight driven approach. By making the whole process of gap recognitions and corrective action insight driven, businesses can thwart the risk of making the same mistakes again and improve their processes objectively.
KPI reporting solves the problem of making the right insights available to everyone, just when needed. Each user in an enterprise can access their KPI reports and dashboards in real time, without any dependency and take informed decisions on their everyday tasks. KPI reporting sets the stage for the digital transformation of an enterprise and empowers it to plan for its future intelligently.