Business used to be an industry, in which decisions were made based on a gut-feeling and position. Even though it made sense at the time, this practice turned out to be neither precise nor effective.
With digitalization on the rise, data has become the new decision-maker. Companies started not only to set goals but also track the process of achieving them.
When aiming high, you need to be rational in deciding which are the key metrics leading to your success.
So here comes the use of KPIs.
Key performance indicator (KPI) is a term for a specific type of control mechanism. It is set to help organizations assess the progress towards achieving their goals.
You know what people say – out of sight, out of mind. How can you have an idea of the state of yours, if you are not tracking it?
Measuring KPIs by using reliable and relevant data can make your actions more proactive and agile. You will no longer have to act on old news, but real-time events. This will give you the power to make informed corrections in your company’s path forward.
You have already heard so much about KPIs, as it is a trendy topic, especially in the business field. But, why should you use them in your own organization?
We want to show you how important and beneficial KPIs are for measuring success. So, we prepared seven benefits of using KPIs in your company. Read more about them below:
1. Defined idea of success
Success is a tricky word. Many people have a definition of what success is. Yet, it can be something completely different for you and your company.
Therefore, KPIs can help you narrow down what your goal is, and which steps lead towards achieving it.
2. Realistic expectations
Once you have set your goals and begun tracking them, you will have a realization. Processes you thought you could get through easily are harder than you thought.
For example, you may have the goal of reaching 20,000 likes on your Facebook page before the end of the year. To do so, you will post twice a week, on Wednesday and Friday, because your analytics say that this is the best time. This is great! Your goal is precise: You know exactly what you want (20,000 likes). You are aware of where (on Facebook), when (before the end of the year) and how to achieve it (by posting more). But, is that realistic?
Not if you decide to do so in November and your current follower count is 200.
It is not always easy to comprehend how much time and effort a goal will cost you. Using KPIs will help you get a clearer idea of what your company’s capabilities and resources are. This is essential on the road to success. But most importantly, it will show you if the goals you set are realistic.
3. Increased transparency and motivation for employees
Another benefit of KPIs is that they help everyone in the company gain a sense of understanding its ways.
When everyone is aware of the direction of the company, all effort will be with the common goals in mind. Showing employees the effects of their actions provides them with a sense of accountability. Also, a way to measure their own professional achievements.
This will not only make your team more productive but also motivate them to work harder towards the goal.
4. Increased productivity
As mentioned in the previous point, knowing the direction is motivating for employees. So, they will be willing to put more effort into their projects.
A company that is being aware of the steps leading towards success is not going to waste time on activities of no use. Therefore, the use of KPIs in businesses can lead to an increase in overall productivity. Additionally, it will bring your teams closer to reaching your goals.
5. Updates on performance
The term benchmarking explains the process of comparison. Most commonly an organization and operations against similar ones. Benchmarking is a great tool to get an idea about the state of your company and its position in the industry.
Without feedback, how can you know if your effort makes a difference? You can start comparing with previous time periods and see your progress.
This will give you important knowledge about your performance. You will know if you are getting closer to achieving your goals. Also, which actions have the highest effect and which harm your business.
6. The possibility to adapt and learn from your mistakes
Knowing where things went wrong can help you adapt your strategy and teach you what to avoid in the future.
If you keep investing in an activity, such as advertising your posts for example, without measuring the outcome, you can end up spending more than you earn.
KPIs can be a great way for you and your team to learn more about the industry you operate in, as well as your customers. After all, most companies do not have endless budgets. Utilizing your resources well can be key to establishing a successful strategy.
7. Opportunities for small achievements
There is one final point to why KPIs are so important for organizations. Yes, it will make your office a more productive and motivated place. But it will also make it more human.
No matter how small it looks in the moment, every milestone brings you closer to the goal. Celebrating those successes with the team will not only bring you together. It will make the workplace more than just a machine.
To conclude, the use of KPIs in your company can be the first step towards improving key areas of your business. They can help you define your goals and optimize the actions towards it.
Transparency in the workplace will motivate your employees. It will give them a sense of responsibility and reasons to celebrate the company’s success. Most importantly, achieving even the smallest successes will bring your team together.
We hope this article gave you some good reasons why you should use KPIs in your organization. For more articles on the topic, check out the rest of our blog. Also, follow our social media channels for weekly updates!