What is the point of setting objectives and targets, if you don’t have the tools to track them?
For any performance indicator to be effective, it needs a target, it needs to be measurable, and ideally it needs to link to the goals of the business. It should give you an insight into the performance and general health of your business without having to dig through pages of reports.
I recommend the SMART model – it is a well known acronym and criteria commonly associated with Peter Drucker’s Management by Objectives.
The SMART model states that all Key Performance Indicators (KPIs) should satisfy 5 conditions:
- SPECIFIC – clear and specific, not vague;
- MEASURABLE – assessed in comparison to an agreed target, transparent, and ideally, easy to obtain;
- ATTAINABLE – realistic, can actually be achieved;
- RELEVANT – aligns with the goals of the business; and
- TIMELY – specific timeframe/s, potentially both short term and longer term.
Well thought-through KPIs will tell you in a snapshot if you are meeting your targets, and help you to identify potential issues which you can address before they become a major problem.
Here are my top 5 KPI categories:
- Profit & Loss, and Balance Sheet key metrics
- Client Revenue
- Staff productivity
- Networking and communications
- Professional development
Using the SMART tool, I recommend consolidating the KPIs into a simple grid which is included in the monthly management report; and can also sit in the relevant staff member’s ‘Job Description’, so that they can be easily incorporated into their annual appraisal document.
Staff like to have clear goals and they like to know what is expected of them. Ideally, your team members should have position descriptions which include a clear outline of their duties, responsibilities, reporting lines, as well as their key performance indicators. When setting KPIs, engage your team, to encourage maximum input and to get their buy-in.
My final piece of KPI advice: ‘less is more.’ Keep things simple. Start with a few business critical targets, then add to these. Review monthly. Be brave and don’t wait too long before taking action if the agency is not delivering the results you need.
Feel free to drop me a line anytime, I’d love to hear from you.