How to Use KPIs to Measure Your Business Process Management Goals
For managers and team leaders who are responsible for the achievement of corporate success (and answerable to senior management and shareholders for results), setting business goals is critical to breaking down the organizational strategy into achievable steps.
But goal setting is just the beginning–KPIs (key performance indicators) are an important way of helping you determine and measure the extent to which your goals are being achieved. They also allow you to identify weak spots or issues that could be contributing towards your failure to achieve success. This article takes a closer look at how to effectively use KPIs to measure your business process management goals, as well as the benefits your organization can gain.
How are my organization’s strategy, goals, and KPIs linked?
Sometimes it can be hard to identify where your business strategy ends and your process management goals begin. In truth, these areas are very much interlinked, and it’s vital that they are working together to achieve the best results for your company.
Your organizational strategy sets out the long-term plan and vision for your business. This strategy is generally broken down into measurable goals that are cascaded down by management to employees. These higher-level goals are then used as a baseline for employees to set their own objectives, ensuring their daily work is focused on value-adding activities that positively contribute towards achieving the overall business goals.
But the key word here is “measurable”. For goals to be meaningful, engage employees to work towards them, and ultimately succeed, they can’t be too vague or undefined. There must be a clear way of ascertaining to what extent they have been achieved – and this is where KPIs perform a crucial role. KPIs analyze and measure the performance of specific areas of the business and provide management teams with valuable information about how the business is performing.
Types of KPIs and what they can measure
KPIs can be split into long-term and short-term KPIs. Long-term KPIs relate to the actions that need to take place to achieve your corporate goals–perhaps increasing sales or improving customer retention or conversion rates. From a business process management perspective, you’ll want to consider specific KPIs such as the average time taken to complete a given process, how many steps are in each one, and the average length of time that each part of the process takes.
Short-term KPIs usually have a more specific focus on the here and now and the recent past. Business process management goals can be measured using short-term KPIs, such as how long particular steps within a process are taking and what blockages might be occurring to slow it down. The main aim here is to increase and improve overall productivity and efficiency within a determined process or business activity.
KPIs can, and should, be used to track tangible achievement against all manner of business activities. Let’s say that you want to improve your customers’ average shop value (this would be your high-level goal, though it should be more measurable than this). KPIs can help you achieve this objective by breaking down the steps you need to take to succeed at it, as they are likely to be complex and span a number of different areas, departments, timescales, etc.
For example, maybe you need a KPI to help you improve customer engagement, increase general traffic to your website, or review your pricing structure to help you meet your overall objective of increasing customers’ average shop value.
Key benefits of working with KPIs
The use of KPIs can help meet organizational and personal employee goals by providing us with ways in which to measure progress against them. But they have another important advantage, too. KPIs are a great way of providing meaningful metrics around the areas that can be improved in your business processes. They can give you the objective data you need to make changes for the better, whether this is addressing a performance issue with a team member or tweaking the order of steps that are carried out within a process.
Finally, while KPIs are undeniably a useful way to gain insights into the performance of your business processes, take care when using them to make sure they add maximum value. For example, remember that while KPIs that focus on quantitative data are important, you shouldn’t neglect areas of more subjective, qualitative information such as customer feedback. Too much focus on the numbers, without a recognition of the story behind them, can lead to an unbalanced focus and a failure to understand customers’ issues and opinions.