Why do we need KPI’s anyway?

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KPIs in your business do you have to have them? Heck yeah! Because if you don’t have them, how are you going to know you’ve been successful? 

There are two reasons to have KPIs – two basic base reasons.

The first: Every human being wants to be successful. So, by having KPIs, you can judge yourself, your business, your staff, everyone around you as to how they have been successful. This was the expectation, the KPI – the key performance indicator. Everyone wants to be successful. It allows you to celebrate success, allows you to look at what you’re doing and go, “Hey, we’ve really achieved that. Outstanding!” 

The second reason is, shall we say, progression or correction. That is, we are not on track, the staff member or the team member is not on track. So how do we make it better? KPIs – the key performance indicator is you have got to have the numbers, and numbers never lie. If a staff member, or team member says they don’t need KPIs, then think about this from your point of view:  The two principal KPIs in your business – the start points – revenue or sales, and profit. What’s at the top of the P & L, what’s at the bottom. If you want to grow the top KPI, the revenue, there are a raft of things you can do. If you want to grow the bottom KPI, the profit, there are also a lot of things you can do to achieve this. 

So those are two KPIs for your business. Anyone who says you don’t need them; says you don’t need property you don’t need revenue? They are wrong. Your staff and every member of your team needs KPIs. It allows you to praise them, to work with as they achieve their key performance indicators. It also allows you to correct them or to work with them to improve what they are doing. 

Let’s use the example of a salesperson. How many calls they might do in a day? How many sales they might get, what the dollars are? Going down a little bit might be the margin. In a warehouse, it might be just in time, the orders that they get out on time, the orders that they get out 100% efficiently. There is a term “DIFOTIS” – delivery in full and on time. 

Now, the bottom line is that every part of your business should have KPI’s. The more key performance indicators you have through your business, the better your business will perform. Why? Because you will see and be able to manage those outcomes to see where you are failing, and where you are succeeding.

KPIs are a pivotal part of every business plan and every business success story.  They are a pivotal part of every story of happiness in a work environment. A happy environment is a successful environment, and a successful environment is achieved by being able to praise people for achieving what you want them to do.