Setting your team’s KPIs and consistent performance reviews are commonly overlooked by small businesses. We should include this as part of the system to deliver our company’s mission. Without it, it will be very expensive as we will deal with high employee turnover rate, training expenses, and customer complaints. It is no different from assessing our own milestones in life and setting our direction.
KPI or Key Performance Indicator is to measure one’s performance against the key business objectives. One’s KPI is a measurable value that demonstrates how effective the company is in achieving its given objectives. It’s what organizations use to carefully evaluate the overall long-term performance of the business, employees, and its success. It’s also specific achievements and successes such as the company’s strategies executed, financial risks taken, and other operational achievements. We can use this as a benchmark against our competitors.
There are different indicators that a KPI is effective. but before strategizing anything, you and your organization should be clear and concise on what your objectives are and how you wanna achieve them, and who will work on what. This should be a process that involves feedback as well from the different department heads and managers. As you go on with it, you will begin to assess which business process is in need to be measured with a KPI and with whom that information should be given.
You can begin with these guide question to further define your KPI :
- What is your desired outcome?
- Why does this outcome matter?
- How are you going to measure progress?
- How can you influence the outcome?
- Who is responsible for the business outcome?
- How will you know you’ve achieved your outcome?
- How often will you review progress towards the outcome?
KPIs need to be more than just numbers. They need to express something strategic about what your organization is trying to do. You can be able to learn a lot about a company’s business model just by looking at its KPIs.
Next up, this said KPI must be communicated properly to the right people that will carry this out. If your employees or stakeholders cannot see the direction well because the KPI risks were not shared will lead to being unable to reach these goals you have.
Explain what you’re measuring and why you’re measuring such. Get everyone involved and listen to other suggestions they might have as well for your KPI for it to improve. Lastly, make sure your KPI is actionable & attainable. Review it consistently to check if it still fits what you’re trying to reach in the organization and use it as a basis for team rewards and incentives.
The truth is that KPIs are only as valuable as you make them. Key performance indicators require time, effort, and employee buy-in to live up to their high expectations.
Performance review is a part of this. It is a formal assessment where managers and heads evaluate the performance of workers and employees, identify their strengths and weaknesses and give honest feedback and points of improvement.
Performance reviews are also called performance appraisals or performance evaluations.
How organizations do it nowadays is to establish a system that can maintain the frequent feedback of their performance may it be quarterly, monthly, or weekly. Some do one on one checkups and casual ones which makes it more relational. Doing this with a smooth process can help employees know what to improve on and what they consistently do well.
This contributes to the overall growth, satisfaction, and development of the people in the organization.
Here are KPI and performance evaluation templates you can use for your small business.
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