There is an old adage in management circles that “what gets measured gets managed.” For all its apparent simplicity, this maxim is actually very difficult to implement, as it requires you to know what to measure, how and by whom. Key performance indicators (KPIs) vary from business to business, depending on their overall goals and key business drivers, so blindly following the metrics applied by other businesses could spell disaster.
First, why is “managing the numbers” so important?
Successful performance management helps extend accountability throughout the business, ensures day-to-day activities are in alignment with your strategy and financial targets, enables faster and more confident decision making, and helps both management and staff to prioritise tasks, identify market changes and spot opportunities. It also ensures broader transparency of business issues, drivers, and impediments to success.
Understanding the What
It takes significant management resources to measure, plot and track performance indicators, so it is imperative to measure only what matters. How do you determine what matters? The answer requires an accurate understanding of how value creation occurs in your business.