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If You Aren't Using Your KPIs, You'll Never Reach Peak Operational Efficiency

If You Aren't Using Your KPIs, You'll Never Reach Peak Operational Efficiency

Operational efficiency doesn't happen spontaneously. You may think you have reached the peak of your production output or workflow, but how could you prove it? What would be your metrics, and why did you choose them? This is where using your Key Performance Indicators (KPIs) comes into play.

Of course, using KPIs to measure your performance requires that you have established KPIs in advance. For your production cycle, it might be the number of widgets you produce every day. For HR, it might be reducing the number of sick days to a specific number, or having a set number of meetings with managers or employees. Marketing KPIs could be something as big as the lead conversion rates from a campaign, or something as simple as click-thru rates on white paper offers.

Whatever your KPIs are, it’s critical to have them in place, and they must be measurable. If you haven't established a list of KPIs for your company, now would be a good time to do so. You can accomplish this by creating them with your management team or hiring an external company to work with you on evaluating your business and creating effective KPIs.

So, now that you have them, what do you do with them?

Think of your KPIs as the vital signs of your company's health. However you designate them is up to you, just don't ignore them.

Surprisingly, despite KPIs being a proven way of evaluating company processes, many companies chose to ignore them.

A study by Google and MIT Sloan revealed many companies don't systematically review their KPIs or use them to help operational efficiency. The study also found that the lack of using KPIs seems to be an organizational "group think" issue. Managers haven't used them diligently in the past, and they don't try, or don’t know how to, change their culture.

However, the study also found that there are many companies that do use them and derive a lot of valuable information from the data.  

How Companies Use Their KPIs Successfully

The study did reveal how forward-thinking companies do use their KPIs to improve operational efficiency.

In particular, it found:

  • Companies use their KPIs to lead and manage their departments. In other words, executive use KPIs to not only maintain their short-term goals but also to plan strategies for the future.

  • They use KPIs to get a complete picture of their customer. Their KPIs measure customer segmentation, lifetime value, brand equity, and churn.

  • They invest in automation and machine learning, so they have a better picture of their data.

  • They "dig deep" into the data underlying their KPIs. For instance, they will examine time of day for click-thru rates on their websites. Plus, they look at their data in real-time.

  • Companies who use KPIs try to keep the number of indicators at a practical minimum. They don't believe "more is better," but they also don't measure everything possible. They develop KPIs for areas where measurement will lead to change.

Many small to mid-size companies believe KPIs are only for the "big guys." This belief isn't true.

Any company, no matter the size, can improve operational efficiency by establishing and measuring KPIs. Equal Parts Consulting believes in the effectiveness of KPIs. They are more than goals and possess more information than numbers.

We encourage you to contact us to learn how we can help you improve your operational efficiency without straining your resources.

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