However, something a colleague mentioned recently had a familiar resonance to it. He said he had worked in an organisation which circulated 141 key performance indicators’ and no one bothered to look at them!
It’s important not to lose sight of the wood for the trees!
I am not surprised at that, having come across that myself. The significance of KPIs’ is that they should be easy to understand and only a handful should matter to the person looking at them. These tell you everything you need to know about the business.
Over time, organisations tend to forget this and keep on adding new KPIs’ without bothering to find out if the audience is even awake!
I have highlighted what I think the critical KPIs’ should be but each manager or entrepreneur can decide their own and change these as the business grows and develops.
The same colleague said he was called every morning by the CEO and asked what the company cash balance was and what the debtor days are. Two KPIs’ that are key to ensuring the cash health of the business.
I would look at a handful of KPI’s daily, which give me an idea of how the business is doing. Mainly the cash balance, level of activity achieved (yesterday, week before etc), sales and estimated EBITDA (yesterday, week before) and the working capital ratio (debtor days can be also be useful).
These can be added to and trends monitored weekly and monthly as required but the important thing is that you don’t overload on KPIs’ and make them meaningless.