We have been discussing the traits that make up a good set of Key Performance Indicators. Today, we’ll round out the conversation with the fourth and final characteristic of a good KPI. It should point to the activities you might need to alter if things in your business start to veer off track. To recap, KPIs are the measures of the processes and financial markers that are critical to the success of your business. You know you are on track to achieving your objectives when they are moving in the right direction. You also know that you have an issue to address when they move in the wrong direction.

Your KPIs ought to point to just what is contributing to the problem so you can make changes in a timely manner. For example, you may decide you have a problem with cash flow, but is it due to slow paying customers, poor internal cash management processes, not enough sales, or some combination of those? To determine this, you will actually need to drill down just a bit further by creating a system of sub-system KPIs. When it comes to targeting areas needing correction, it is necessary to take this approach to tracking detail of what is going on in individual areas.

For more information about establishing and monitoring a set of Key Performance Indicators for your business, please contact a Simons Bitzer team member at (317) 782-3070.