Choosing the right KPIs
With crucial KPIs buried deep in every business, finance professionals speak to Lauren Razavi about how they harness their company’s hidden depths for success.
Monitoring success and tracking business development is most easily assisted by one thing: key performance indicators (KPIs). And there are few areas in any organisation that are better suited to utilising KPIs that contribute to overall business growth than the finance function.
Careful definition of ongoing operational goals is essential if, for example, a manufacturing company wants to repeatedly achieve zero defects in a product or if a digital service provider seeks to reap five-star customer satisfaction ratings. But with the right KPIs selected, it’s possible to shed new light on the inner workings of a business – and create effective plans to make greater use of resources.
A company’s KPI success can focus on progress towards strategic goals or instead focus on wider themes, such as health and safety, employee wellbeing and environmental impact. The foundation to choosing the right KPIs, however, is understanding your organisation’s goals.
According to research by PwC, every one of the companies in the FTSE 350 makes the effort to identify their KPIs, although many targets are by no means universally considered to be the correct ones, the same research revealing that FTSE 100 companies have an average of six financial KPIs on top of three non-financial KPIs.
This is an extract from the Business & Management Magazine, Issue 264, May 2018.
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