How is your business really performing?

If you were asked by your bank manager how was your business performing could you answer with any certainty?

All the leading athletes have a coach or consultant that monitors key performance indicators relevant to their discipline to achieve the best possible performance. Cricket – runs scored, wickets taken, catches made, run rate, average runs or wickets per match etc. It is the same with leading businesses today!

Even if taking on a coach or consultant isn’t for you at present monitoring your businesses key performance indicators is a must and can be done via a scorecard.

It is just a small step from measuring your performance to the much more dynamic process of driving up performance levels across your business. This involves setting challenging targets in the key areas that drive your business performance.

7 Reasons to Scorecard

1)  Scorecards drive better performance.

2) Scorecards implement strategy.

3) Scorecards help ensure that you have the right measures.

4) Scorecards encourage balanced performance.

5) Scorecards point out what’s missing.

6) Scorecards encourage good management.

7) Scorecards communicate—they tell the story.

Assigning responsibility and resources

Once you have identified the targets based on your KPIs that you believe will deliver the strategic growth you’re aiming for, make sure you follow through by assigning clear responsibility for delivering each of them.

It is fine for your top-level strategic objectives to be abstract and business-wide, but your KPI targets should be concrete and clearly owned by a department, individual or team

Hitting your targets is unlikely to be a cost-free process, so be ready to make the necessary resources available when needed. Also, undertake regular reviews to assist with motivation and to make changes if the progress made isn’t as expected.

Sample KPI
Financial – Sales, Gross Profit, Net Profit, Markdowns
Customer – Customer Satisfaction, Number of customers, referrals, repeat business
Internal processes – conversion rate, number of leads, customer service
Innovation/Learning – Hours of training, employee satisfaction

Call Watts Price & Associates for further guidance on how to create a balanced KPI scorecard for your business or team.

 

Richard Kemp – Watts Price Accountants
E: richardk@wattsprice.com.au

The advice provided on this Article is general advice only. It has been prepared without taking into account your objectives, financial situation or needs.