Key Performance Indicators Management Reporting
KPIs or Key Performance Indicators are very similar to the grades you got in school. Your grades showed how well you were doing in school compared to your classmates and your KPIs are used by your workplace management to measure how well you’re performing compared to your colleagues.
Certain indicators are set at the beginning of the fiscal year which are reviewed quarterly, half-yearly or annually. KPIs are usually SMART (Specific, Measurable, Achievable, Relevant, Time-bound). Let’s look at some KPIs normally used by management for the organization.
1. Finance KPIs
Net and gross profits, inventory turnover, current ratio, return on equity and debt-to-equity ratio are all finance KPIs. These KPIs will generally give help in making short- and long-term decisions as well as serve as signals to investors. The KPIs will also help with streamlining financial processes and increases efficiency.
2. Sales KPIs
Sales KPIs tell management which product or service is working well in the market and which direction their sales team should move. These KPIs are more frequently reviewed in order to update sales strategies and determine which target market to focus on.
Sales KPIs are generally product performance, sales growth, average basket size of purchases, demographic data and sales target. Sales teams work at a very fast pace and meeting KPIs are integral for their career development.
3. Production KPIs
As the name suggests, these sets of KPIs are more process-oriented. This has everything to do with how efficiently a production process is working which includes the man and machine. You have product counts, rejection rate, equipment efficiency, cycle time and downtime.
Line or floor managers religiously monitor whether these KPIs are met in order to keep organization operational costs down.
4. Marketing KPIs
These are very modern KPIs which means it evolves rather rapidly. Return on Investment (ROI), SEO keyword ranking, traffic sources, conversion metrics and cost per lead are just a few examples of marketing KPIs.
Modern management uses these KPIs to report which campaigns are generating revenue for the company and justify spending money on promotions. Online and web presence are an integral part of achieving success nowadays. Therefore, monitoring web traffic and social media reach is also important to meet KPIs.
5. Tech KPIs
Tech companies usually set Daily Active Users (DAU) and Monthly Active Users (MAU) as their KPIs. For them how many users are actively engaged in their tech platform is an indicator of how well they are performing.
Management designs their retention strategies based on user behavior and DAU and MAU trends overtime. In this increasing tech-dependent era, data analysis is required for identifying trends and understanding market needs.
KPIs are unique for every organization and sector. Some organization management opts for traditional methods of KPI reporting while others engage third party organizations to digitize the entire process.
There are also others who have customized dashboards to monitor and report KPIs. Whichever method they opt for, KPIs, when used right can provide the management with valuable data on which direction the organization should head.