“What gets measured gets managed”. It’s only when you see current and accurate performance data and track trends that you can fully understand your business. With the benefit of that data your decisions will mostly be based on fact rather than best guesses or gut instinct. So they’re more likely to be better decisions.
There’s a bewildering range of tools available for measuring business performance, and more are developed every year. Some are enormously complex but the best give business leaders real-time information on their key metrics in a simple and easy to use format. A small number of Key Performance Indicators shown on a simple dashboard.
The “lagging” indicators tell you how you’ve performed in the last reporting period – whether you’ve hit your budget for sales and profits, whether you’ve met your health and safety targets, whether you’ve gained or lost customers and gained or lost staff. The “leading” indicators tell you what’s likely to happen – so if your sales pipeline is thin your future profits will be taking a dip, if you’re not planning to train your staff or maintain your machinery don’t be surprised to see productivity falling.
Both lagging and leading indicators are important, and the information needs for each business are unique. The key is to identify what’s important to your business – keep it to less than 10 measures – and use it. Collect the data, review it regularly, understand what it’s telling you, and – most importantly – act on it.
We measure so many things in life – our driving speed, exam performance, our own size and shape. All for good reasons. Don’t run your business on guesswork, run it on real and accurate data and your results can only improve.