We use some type of KPIs, ratios or business metrics on a daily basis even not as part of our organized business reporting.
Metrics like profit margins, COGS, operating cost, customer retention, customer satisfaction, number of late orders, number of customer complaints are examples of measures every organization uses as part of improving its performance and achieving its goals and objectives both on strategic as well as tactical level.
However, when we work on defining our top KPIs for the sake of designing and developing well organized performance management system, defining the right metrics can be overwhelming and it is as important as developing a strategic plan for your organization.
Why are metrics so important in business?
First of all, the old saying “what gets measured, gets improved” is even more relevant today in the high competitive business world than ever before.
Second, by looking at the KPIs on any organizational business dashboard or scorecard report you can get a pretty much a good idea of what their strategy is and where is their main focus.
Measuring, monitoring, tracking and reporting different metrics will result in different focus and ultimately different results. It is very important and critical that your choice of KPIs to be monitored is in line and creates a good fit with your overall strategy.