December 16, 2018

4.1.2 The benefits of target-setting

The purpose of performance measurement is ultimately to drive future improvements in  performance. The process will also focus company training to concentrate on the subjects that will make a difference to business performance. There are two main ways you can use KPIs to achieve this kind of management power.

  • Use  KPIs to spot potential problems or opportunities. Remember, your KPIs tell you what’s going on in the areas that determine your business performance. If the trends are moving in the wrong direction, you know you have problems to solve. Similarly, if the trends move consistently in your favour, you may have greater scope for growth than you had previously forecast.
  • Use  KPIs to set targets for departments and employees throughout your business that will deliver your strategic goals. The KPI when properly developed should be provides all staff with clear goals and objectives, coupled with an understanding of how they relate to the overall success of the organisation. They should be published internally and continually referred to – this gives everyone in your business a clear sense of what they should be aiming for.  If you can, reward people for exceeding their goals.