KPI dashboards are best considered from an operational and strategic perspective.
An operational dashboard allows you to check the day-to-day processes and outputs of your business to make sure everything is running smoothly. It provides information that allows you to fix issues before they become problems and affect performance. An example might include a call centre KPI dashboard which shows the number of calls, average wait time, on hold, etc.
Your strategic dashboard, on the other hand, looks to the future and seeks to identify obstacles and challenges that you may face on the way to achieving your strategic goals, such as profit projections, market share, growth, etc.
Both types are important for business success.
DECISION MAKING TOOLS – WHERE TO START
As a starting point, go back to your strategy. If it’s too long, condense it to a one-page strategy of clear objectives, then you can identify what you need to have in place in order to meet your objectives.
Key Performance Questions
Ask, what do we need to achieve? Not, what data do we have available to us.
Take each strategic objective and identify one to two Key Performance Questions (KPQ) for each. By doing this step you will be able to work out what data you need to collect in order to help you answer your KPQ. For example, most businesses want to make a profit, so a KPI could measure which areas of business are the most profitable, this could align to a strategic objective to increase turnover.
Set clear goals using a SMART framework (Specific, Measurable, Achievable Relevant, Time-Bound).
What data do I need?
Identify the data that you need in order to answer your KPQs. Everything can be measured!
Evaluate what you have
Now you know what data you need; the next step is to identify what data you already have and what’s missing to aid you on your journey. Also, find out what KPIs are already being collected around your company by various departments/business units as you may be able to make a few changes to the data collection process in order to get what you need.
The right supporting data
As an example, industry information, demographic data, trend statistics, etc., could be used to support the findings of the data you are collecting for your KPIs that is relevant to your strategy.
So now what? You know what data you need but how do you collect it and how often? What measurement methodology will you use?
Data has a shelf life, so make sure you align when you collect it with how and when the business uses it, i.e., how often the business reports. If you don’t do this, then the information loses relevance.
Ownership of KPIs
It is important to assign owners to KPIs and there are two types: interpretation of data and data collection.
Someone needs to own interpreting a KPI and what it means for the business as well as monitoring it to check for change.
Data collection can sometimes be automated but there is usually some human element in the data collection process.
Communication of KPIs
Engage the workforce by outlining what you are collecting, why and how this links to the company’s strategic priorities that they will relate to.
You therefore need to ensure everybody understands how the metrics you are gathering are linked to your strategic priorities. This will increase ‘buy in’ – how personally involved and enthusiastic your staff feel about your priorities – and ensure that constant review and improvement are at the heart of everything your people do. If you simply tell everyone that they have to collect a whole heap of extra data from now on without explaining why, you are likely to end up with a very cynical and disengaged workforce!
Insights should be consumable, informative and actionable. Therefore, do not bury insights in long winded reports.
Really effective visualisations clearly illustrate trends and variations in data and engage the reader, with an explanation of the insights so that the nuggets of wisdom extracted from the data are clear.
KPI dashboards are commonly used and if done correctly are a great way to condense information into a meaningful format. It’s a simple visual display of the most important information that decision makers need to help them achieve their objectives.
It won’t count for anything unless your organisation reports and communicates the KPIs to others effectively.
Review, review, review
Don’t collect data for data’s sake and waste hours of time in the process doing it. If a KPI is not useful to your business in making better decisions, then it’s just noise. Therefore, it’s important to regularly review the metrics you are using.
TO WRAP UP
In conclusion, KPIs will only work if you choose the right ones, then they become an important tool for improving your business, making better business decisions and gaining a competitive advantage. They must be used regularly to analyse what they are telling you.
Following the steps outlined in this blog should help provide a simple framework for implementing KPIs in the right way for your business.