Which areas of my
business should management information (MI) focus on, how often should I report
it and how do they relate to my key performance indicators (KPIs)?
KPIs are not just an activity owned by the board or directors – they should operate across the whole firm and are central to operational management. When widely adopted and understood, they are a powerful tool for managing organisational change, business growth and continuous improvement, allowing businesses to compare their performance against market benchmarks and competitors where available.
KPI trends also help spot potential issues and identify business opportunities and enable targets to be agreed at operational levels to help deliver wide strategic goals. Departmental KPIs can reflect customer satisfaction, sales volumes, repeat buying, profitability, quality control, staff absence or staff turnover. Each business’s KPI’s will depend on the individual setup and markets, and as such, KPIs should relate to specific strategic objectives, be clearly measurable and have set timeframes (following the SMART management acronym).
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Balanced Scorecard approach
WHEN: You want to establish ‘joined-up’ organisation-wide objectives and targets, reviewing performance measurement over time, reflecting changing internal and external factors.
WHY: The Balanced Scorecard helps ensure that businesses consider the operations of the whole firm in delivering strategy.
WHAT: An in-depth article that covers financial results, customer and stakeholder satisfaction, internal business processes, workforce learning, development and growth. The practices will help with regular performance management tracking.
Why SMART goal setting is crucial
WHEN: You are starting a business and want to set goals and measure growth
WHY: Studies have shown that organizations or individuals that attempt to reach specific goals rather than vague ones have a much greater likelihood of accomplishing them.
WHAT: An article that provides a mechanism for feedback and improvement to the core customer proposition relating to offer, quality, service and price
Financial performance targets
WHEN: You want to examine internal processes to shine a light on those activities the business must excel at to meet and exceed customer expectations.
WHY: A small number of individual operational issues that are underperforming can collectively cause much greater damage to customer service. Defining operational performance metrics helps deepen understanding of production, leading to opportunities for improvement.
WHAT: An explanation and examples of different SMART objectives relating to the same area of a service. Can help align objectives to a business’s strengths and sources of differentiation. This can include areas such as innovation,
WHEN: You want to identify which products, services or customer segments are most profitable.
WHY: When you understand your cost base, key metrics and margins, you are better able to deploy its resources and serve customer profitably and sustainably.
WHAT: An article evaluating financial measures, including turnover, turnover growth, turnover concentration, gross profit margin, investment levels in research and development, staff costs as a percentage of turnover, net profit margin, cashflow and debt ratios.
HR performance management
WHEN: You have a high staff turnover resulting from lack of development or productivity is flat or falling.
WHY: By tracking investment in people, you are better placed for innovation, self-improvement and long-term development.
WHAT: An examination of day-to-day efficiency improvements through skills and knowledge development.
WHEN: Your business objectives are unclear in relation to outcome, timeframe, measurement or achievability.
WHY: Objectives that are not precise mean different parties have a different view on key aspects of delivery, resulting in wasted resource and tension.
WHAT: A management process and control for setting clear objectives that are widely understood.
WHEN: You need to ensure the management team is focusing on implementing strategy and less about day-to-day tasks.
WHY: Implementing the management of the Balanced Scorecard into day-to-day operations helps embed awareness of the need for service improvement across the workforce.
WHAT: An article detailing ways to help senior management communicate objectives consistently across board and the whole organisation.
