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Key Performance Indicators

Key performance indicators (KPIs) can be simply described as the basic values used to monitor and measure effectiveness. Although there are universally accepted key performance indicators such as the profit margins, in the modern markets that are characterized by massive competitions organizations have developed and implemented their own sets of key performance indicators to enable them stand the test of time (Parmenter, 2015). Specifically, these set of factors offer a clear indication of an organizations’ progress towards an established set of objectives, therefore, they provide a basis for both strategic and operation improvement.

Some of the main advantages that are due to KPIs include the ability to provide the right information about the strengths and weaknesses of an organization hence provide an opportunity to strategize on how to improve performance. KPIs further provide a measure against the benchmark and in the process provide the necessary data needed to help the organization move forward more effectively. On the other hand, key performance indicators manifest a number of disadvantages for instance, if not followed accurately, these factors might affect the organization negatively. It is thus pertinent that all the stakeholders understand their significance and collaborate with one another in their pursuit. Another key con of depending on key performance indicators is associated with the fact that an organization might get it wrong. When the targets are not as important as previously thought, replacing them to achieve the right organizational objective can cause the company issues that will make it ultimately fall behind the competition (Ahmed, Siantonas, & Siantonas, 2017).

There are a number of key performance indicators that every given organization should consider if they intend to improve. For instance, the Financial Metrics offer a clear valuation of the profits, costs, the revues and targets, and the overall expenses against the budget, therefore, leading the organization towards what is profitable and sustainable. Another important KPI involves the customers. Customer Metrics as an indicator involves a look at the number of customers an organization has, their retention and satisfaction, and their acquisition process compared to their lifetime value to the organization.

Measuring how the processes of the organization performed offers another crucial key performance indicator. Here, the main focus is on measuring efficiency of all the procedures and developments an organization is involved in. employees are an important part of any given business, consequently, key performance indicators that are focused on their turnover rates, satisfaction and percentage of response to open positions can enable an organization put in place the perfect strategy in a dynamic business environment. Sales KPIs on the other hand include the number of contacts gained over a given period of time, the net sales, time spent to bring in the sales and other resources that have been utilized (Parmenter, 2015). Finally, the Marketing KPIs include the customer traffic due to a given marketing strategy, number of concrete leads attained and the overall conversion rats of these leads into actual customers.

It can be deducted that the main aim of every organization is to accumulate profits and remain sustainable over a very long period of time. Although a lot of financial muscle must be flexed in order to achieve this, there are other non-financial key performance indicators that must be held in the consideration if we are to achieve a balanced development strategy. For example, the general measures that are related to customer relationships, the well-being of the employees within the organization and the quality of the products and services can be used to figure out the exact direct that the company must take to improve its sales and marketing campaigns (Bogicevic, Domanovic, & Krstic, 2016). When people within the organization are well motivated they tend to be more entrenched into what they do. When customers’ needs are met especially by giving the right goods and services, then they will remain loyal to the business and it will ultimately contribute to the overall prosperity of the business.

References

Ahmed, A., Siantonas, G., & Siantonas, N. (2017). The 13 key performance indicators for highly effective teams. Routledge.

Bogicevic, J., Domanovic, V., & Krstic, B. (2016). The role of financial and non-financial performance indicators in enterprise sustainability evaluation. Ekonomika, 62(3), 1-13.

Parmenter, D. (2015). Key performance indicators: developing, implementing, and using winning KPIs. John Wiley & Sons.