Key performance indicators are one of the hallmarks of good business management. Performance indicators provide an analysis of the overall business operations of a company, which can be used to make decisions about finance, employee training, resource deployment, and many other facets of the business. Although universal indicators do exist, business owners will benefit more from having information about their individual companies.
Goals related to sales, production, resources, and more are clearer and more measurable when companies use key performance indicators. Over time, performance indicators create a historical record of business operations, so that it is easy to make comparisons year-to-year or quarter-to-quarter.
Performance indicators can serve as an external benchmark that allows for the comparison between a company and the industry standard. It can be difficult to measure the performance of a small business to that of a larger operation, but performance indicators let business owners look at smaller, more comparable data sets.
Using performance indicators to set company policies can help make sure that all employees follow the same operating standards. Policies related to customer service can benefit from the use of customer service performance indicators, and operational managers may find performance indicators useful in reviewing employee performance.
Key performance indicators usually track money spent on business operations and the return from business opportunities. Implementing performance indicators that specifically track cost cutting measures or increasing sales can enhance profitability by allowing for small operational changes that have a big impact based on what the performance indicators show.
