"Perhaps now more than ever, you need to start keeping a close eye on your KPIs"
An activity within your business which is identified as “we have to do this well so the business does well”, is called a Key Performance Indicator or KPI. A measure of each one indicates how the activity is performing.
Success in all the KPIs ensure the goals of the business are most likely to be achieved. The whole is dependent on the sum of the parts.
Using KPIs in business can be likened to driving a car. The goal is to drive from A to B. In doing so you’re constantly monitoring your speed, staying in your lane and of course you have to watch the performance of other road users. There’s also the fuel gauge, seat belts done up, and other factors to monitor within the car. If something is not right you’re the driver and you have to respond to it and manage it. The magic is that as drivers we monitor and manage our driving KPIs almost unconsciously in real time, for the whole time we’re behind the wheel. Goals like getting from A to B are achieved every day because of KPIs. With some exceptions, we’re all pretty smart when it comes to driving, aided by increasing technology in cars themselves, coupled with local and nationwide laws, and police to ensure we all adhere to them.
When it comes to managing a business you need an array of indicators similar to those when driving. The goal is to get where you want to be at some point in the future. You need to identify the key internal and external factors that will impact on how and when you arrive. The KPIs tell you where you are right now and if you’re on course.
As you’re putting together your thoughts and plans for 2017, consider packaging into the mix a finite number of KPIs to support the goals you want to achieve.
At director level in a professional engineering practice, there could be several top level KPIs. Across the whole business there could be dozens more. The major areas in a professional engineering practice as in most businesses are below. Each could contain many subsidiary KPIs.
- Cash Flow
- Staffing and Skills
- Project Management
- Debtor Recoveries
If you haven’t embraced the concept of KPIs before in a structured way, start small. And just as when you’re driving your car, stay on top of the KPIs you decide are important.
Modify them if the indicators aren’t giving you the assurance you need, or if you see the benefits and want to go down to a more micro level to do even better.
Pick one of the above, or pick them all.
How do your KPIs stack up? At Abtrac we’re business management experts. We have consultants in house or we can put you in touch with others to help you with any or all of the above.
Contact us with your comments or thoughts on KPIs or anything else at any time. We’ll be pleased to respond.