KPIs in action
Who uses KPIs? Managers at all levels in an organization can track key performance indicators to assess how well their groups are meeting their business objectives, whether performance is improving or declining, and how their group's performance compares with that of other units or groups within the company and in rival organizations.
Consider these examples:
- A CEO examines return on investment (ROI) by division, or her company's cash flow, by month and quarter, and compares the results to those of competitors.
- A customer service manager tracks customer service quality using surveys. If the surveys suggest that service quality is dropping, he might need to add more account representatives to improve service levels.
- A benefits administrator monitors how many claims her group has processed during the current year, and compares it with the number processed in the previous year. An increase, for example, may suggest it's time to invest in new benefits software that can speed up claims processing.
- A product development manager assesses the ratio of sales from new products to total sales. He decides that his group needs to invest more in research and development to increase the ratio.
- A human resources staffer calculates the percentage of employees who actually attend voluntary training programs offered by the company, and compares the result against the targeted percentage. A drop may indicate the program is unsuccessful and can prompt an inquiry to find out why—possibly saving the company thousands of dollars in ineffective training programs.
- A communications expert reviews employee survey results to see whether workers understand the company's corporate strategy. Lack of understanding may suggest the need for clearer presentations on strategy by the company's CEO and other executives or the need to reach employees through different channels.
If you've recently started in your role as manager, you may not yet know which KPIs are used in your unit or group. How might you find out? Ask your boss what measures your group has been using to track performance. If your unit has a business analyst, see if he or she would be available to discuss your unit's KPIs and other performance metrics.