How Key Performance Indicators Help Your Business

What are the main key performance indicators for the health care industry, for example a hospital? Are they significantly different that those for a normal for-profit business? I work at a hospital and I believe that the same indicator models used for other companies could also be applied to not-for-profit organizations.

@Mike as a manager you are going to be charged with doing both. You can still use the established KPIs for measuring your goals and achievements -making sure that your entire team is on the same page and moving forward while at the same time keeping the lines of communication open and getting to know your employees. KPIs should never consume all of your time. If they are, then you need to revisit them and make some changes.

As a manager, how much of your time should be spent interpreting and using KPIs as opposed to doing it the "old-fashioned" way of getting to know your employees and understand their personal strengths and weaknesses? We see in baseball some teams go gung-ho about the sabermetric angle of the game and lose the "clubhouse chemistry" that is an important (but immeasurable) aspect of performing well. How do you make sure you don't lose that personal touch?

Over time, we can use our companies' KPIs — quite apart from the data we used to create them in the first place — to discover how we contributed to past company successes. We can then hone the ways in which we use KPIs to craft future company policies, putting an even greater emphasis on success!

KPIs definitely help a firm to increase their productivity levels. Managers don’t need to brainstorm ways to make the production line run faster if they have access to KPIs. All they need to do is analyze the data and make the necessary adjustments. I can see KPIs being just as helpful for small businesses as they are for large ones.

@Duncan I have to disagree about telling teams about your use of KPIs. Although I value transparency, I would not want my teams overly worried about how management is interpreting KPI data. When using KPI information properly, many factors come into play. I would rather keep the focus on management using the data to make changes and encourage employees as necessary to improve weak areas.

Thanks for the comments. @Abbey yes there are firms that can help a company set up their KPIs and help them to track them and modify them. Many companies rely on those KPIs to determine budget and manpower needs for the foreseeable future. KPIs certainly can be modified as time goes on. Maybe the initial indicator was too broad or even too narrow and needs to be divided into steps or maybe the issue needs more than one indicator to track it. Don't be afraid of these indicators. They are a great way to keep you on track.

KPIs can be very important for an organization to be successful. I imagine not every company utilize KPIs, but of those that do, how do they manage the data? Are there firms that can be contracted to process KPIs? Especially with smaller companies, I think it might be hard to know what data to look at and how to analyze this information.

With the KPIs in place, I think it is also of great importance to make it known to all involved parties, especially the in-team that includes sales representatives and departmental heads, that you are using the technique to track your performance. I believe team players will be more conscious of their input towards raising the performance index if they are aware of the specifics of evaluation at the end of each period.

KPI's are computer generated. But I wonder whether managers can rely strictly on data interpretation to make changes that benefit for the company? For example, the article gives an example about marketing team data. Are there other factors that impact sales team lead conversion rates that aren't captured by KPI data?

While I agree that KPIs are very helpful for gauging various aspects of a business in its marketplace, in my opinion it's very important to always prioritize employee satisfaction. If employee morale drops, everything about the company suffers. No amount of adjusting other factors will compensate for an adversarial internal atmosphere.

You most certainly need to know how to interpret the data, otherwise your ROI on the KPI software is moot. How you put these numbers to use is the key behind KPIs. There are tons of great programs out there to measure how your company does, but you need to know how to use the tools effectively to take your business to the next level.

Key performance indicators are helpful in identifying customer traffic and retention; however, a reliance on KPIs often leads to unsubstantiated assumptions that affect the viability of the employee base. For example, if a company is focused solely on numbers and does not account for variables, employees could be at risk of losing their jobs due to what appears to be low production rates.

Does having broad goals make it difficult to use metrics effectively? It seems like many business owners would only benefit from quantifying their activities if their goals are specific and segmented. I know many SaaS companies that handle KPIs for companies use A/B testing and other trial-and-error methods to find out what drives success or problems, so maybe it's useful to start off with broad goals and use the initial implementation of performance metrics to evaluate and refine those goals.