Let me kick this video off by asking how many of you have been to a sports game where they didn't keep score? Of course not, it would be stupid, the most stupid game you've ever been to. In fact, it was frustrating, I don't know how many of you have got little kids, but I remember when my kids first started playing soccer or any of those little kiddie games where they try to introduce them to a sport, when they're under a certain age they actually don't keep score. And it's very frustrating as an adult to watch that happen. We're used to seeing a score being kept so that we know, so we can measure ourselves against the opposition and see how we're doing.
Why KPI's are important in Business
I want to talk to you a little bit about why KPI's are important in your business, and how it helps your team of people in your business, achieve what they need to achieve. Now for those of you that don't know what KPI means, it is a little bit of jargon, it stands for Key Performance Indicator. Now essentially KPI is the scoreboard, let's just call it the score. And in your business, you need to make sure your team is clear on a couple of things first.
Which way are you going?
First of all, what direction on the field are you running? So what that means is, are you all clear on the goal, and where the goal is, and what you need to do to get there. Because too many businesses I see are just doing this hickelty-pickelty, they just go in and do their thing for the day and then off they go. And in fact they did a survey of a bunch of employees for different big businesses, and they said let's survey and see what their frustrations are. Now what was interesting was the business owners or the managers said they'd think the number one frustration was not being paid enough, yet that was like, number four on the list. Number one was that it wasn't clear whether they'd done a good job or not. It was more about did they have good job descriptions and KPIs so they knew that when they achieved what they were supposed to achieve, rather than just coming in and doing a day's work and hoping for the best.
Your team need to know what the score is and what score is expected to be. It's about making sure that you, as a manager or a business owner, have got it clearly mapped out for your team for what the vision is, what the direction we're running, what are the rules of the game, and how are we going to get there. So KPI's are vitally important!
How to measure KPI's
Now what sort of numbers do you want to track, because you don't want to get all anal about it and be measuring things to the nth degree, because it just becomes too complicated. But there are some basic fundamental things that you should measure. So for example, what about total sales? You know especially for a sales team, how many new customers do we bring on? What was our conversion rate? What do we want to achieve on a daily basis? What's our breaking even point? All of these KPI's are vitally important to help your team understand what it is they're chasing after. What is it they're heading towards. And really if you want a team to win, they need to know the rules of the game, and they need to know what direction they've got to run on the field, and how many tries they need to get, or how many points they need to score, because that's going to help them do a better job for you.
How to decide on KPI's for your Team
If you do run a team and you've got a team of people and they're not sure what the objectives are for their role, now's a good time to get crystal clear and here's a good way to do it... Sit down and write down each position. Forget about people, don't worry about putting names against positions, just write down each position on the field. It's no different to a sporting team, they've got right wing, left wing, half back, full back. These job descriptions are going to be positions in your business.
So for example, you might have sales manager; That's a position. Don't worry about putting a name next to it. You might have administration. You might have recruitment... Now you might have one person that fills more than one position, and that's okay. That's why I'm saying don't worry about the names. Just write out what the positions are.
Then underneath that position, start to write down what it is that that role has to fulfil. If it is the sales manager, what does that role have to do? Does it have to manage a sales team? Does it have to train sales people? Does that position have to get sales? Does it have to look after a certain number of accounts? What does that role have to do? And then go to another role. My recruitment role, and say that recruiting person has to do x, y, and z. So you can start to map out exactly what each role is responsible for, and then you can set some KPIs.
Look at the task. If the task is to do x, how well does that task need to be carried out for us to say, "Yes, you've done a good job," or, "No you suck, and you need some help." You need to be able to define that. So when you sit down with your team, you can sit down and say, even if they've got to be given 2, 3, 4 positions, you might hold 4 roles yourself. But at least now you can measure against the KPI for each of those positions.
That's really a good starting position for getting you and yourself clear of how to keep score in your business.
About the Author
Ben Fewtrell is a sought-after Business Coach, Keynote Speaker and trainer who has featured in Virgin’s Inflight Magazine and Entertainment Portal, SKY Business and “Secrets of Top Business Builders Exposed”. He is also the host of the popular Business Brain Food Podcast where he interviews leading experts on anything and everything business.