Many strategic management methods have been developed and tested over the years. Almost all managers have found that the best approach draws on contextual, quantitative data gathered from the workplace. This emphasis on measurement and subsequent analysis may be embodied in the concept of key performance indicators or KPIs.
Key performance indicators refer to carefully selected parameters that are important in describing performance. They are called what they are because they are usually very descriptive or very important to the performance of an individual or group. Naturally, each organization will have a different set of key performance indicators depending on the area and its specific goals (in other words, its mission and vision).
For example, net sales and net profit are almost always key performance indicators for any group that deals in sales. This is because profit is important for keeping any commercial or business organization afloat as well as for future growth. Hence, whether a group is making a profit or not, and the amount of profit or loss, is an important parameter to keep track of.
A firm dealing in customer service needs to consider other, additional factors, such as customer retention, percentage of return clients, and more. These key performance indicators will then measure how well the firm is treating its customers. Intermediary groups that do not have to deal directly with end customers, on the other hand, may not find this same set of customer service KPIs as useful. etc.
So the first step in applying this concept to your organization is to select the most useful and relevant KPIs. This will depend on the factors mentioned and illustrated above. This selection should not be difficult, because it is this same parameter that management should already track.
In the actual implementation of the KPI system, KPI software can simplify matters. What these programs can do is effectively centralize the delivery and monitoring of these key performance indicators. A central control center under management can transmit selected KPIs to various computers throughout the organization. It then becomes easier to transmit and receive feedback on these KPIs as well. An efficient network system will make KPI software really shine.
KPI software can store all data on these performance indicators that are sent from all organizations. This digital storage then makes it easier to process and analyze data related to these KPIs. Graphs and charts tracking the development of a KPI over time can be easily created. It also becomes easier to compare the performance of different parts of the organization with all data stored in a central database.
The KPI concept has helped many managers and organizations base their management decisions on sound data and observations. Using KPI software will make the implementation of these key performance indicators easier and more effective The use of key performance indicators is a management method that is definitely worth trying.
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