Many firms struggle with their growth due to a lack of focus. This article is about a tool to help keep that focus going, when the excitement of your latest new idea has died down. KPIs can be a great tool, but they’re like Marmite. Do you like or hate KPIs? The owners of firms I talk to either hate the idea of using KPIs, love them, or are not really sure what they are.
I was recently having a great discussion with an accountant (who is signing up for Business Coaching) about KPIs. Being an accountant, he “understood” the idea; however he felt it didn’t apply to his firm, so had discarded the idea like wasted tissue paper. We talked some more and suddenly he changed his mind; he then implemented a new process and loves it.
What are KPIs?
Normally KPI stands for “key performance indicator”; I often call them “killer performance indicators” for the simple reason that if you choose the right ones you start to deliver a killer performance.
Focus on the critical things
The idea is to keep a continuous focus on the 5-7 things that are critical to success in your firm. By creating that focus you can clearly see if you are doing the right things. It also allows you to have much clearer focused discussions with staff.
Why should you use KPIs
- The fact that you are watching them every day allows you to see if things are going wrong. Many professionals say to me “I know what the performance is, although I don’t always look at the numbers“. One business owner often said that to me, until he was running out of cash when he realised that his debtor days were 167!
- What’s going well? Clear understanding of the numbers will allow you to see when things are getting better, celebrating success and understanding what’s driving it are great motivators.
- Your team see them too. By having a clear set of indicators allows your team to see what’s important to you. This further helps improve performance.
What should you measure?
Here’s the hard part! There is no one set of measures that every firm should be following. Here’s some thoughts to help you think about what to include:
- What is critical to your firm, at the moment.
- Where are you taking the firm and what are the key steps on the way?
- Where are you taking the firm and how far are you along that journey?
- What are the key drivers of profit, productivity or sales in your firm (Maybe Gross profit, Sales, direct costs etc)?
- What are the key values that make you different to other firms, and how well are you doing?
- How are your staff succession plans monitored?
- How much money do you have in the bank, are owed by others? What’s your target?
- What are the key actions you need to take on a regular basis to ensure success, how many have you done?
- How many prospects are in your pipeline?
- What is your client feedback saying?
Complexity of measuring.
If you’re trying to measure something complicated and getting the numbers takes hours, then you’re probably measuring the wrong thing. Click here to read another article about KPIs and complexity. If you would like to download a free report, “Improving performance, using KPIs and not destroying my firm’s culture”, it's free and waiting for you to download right now. Click here for instant access (email address required).
Creating focus by looking at the right elements of your firm, sharing them with your team and measuring them simply will help inform your actions and drive success.
What KPIs do you measure and how has it helped you? I’d love to hear.
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