I recently watched Moneyball, a film based on the real life story of the Oakland As baseball team, who in 2002 were struggling to compete with larger, and richer, baseball teams like the New York Yankees. In order to level the playing field, whilst not obliterating their comparatively small budget for building a team, they focused on statistics, utilising analysis to identify the figures which best predicted a winning team. Rather than focusing on a handful of ‘Major Stars’, they built a team of ‘average’ players, with consistent performance results. This approach enabled them to reach the playoffs for the famous World Series.
By understanding the Key Performance Indicators for your business you can become more competitive and more confident in your capabilities. The first step of understanding your KPIs is making sure they are set up correctly. Even if your KPIs are established, there is room for reviewing and refreshing them as your business changes.
1. Ensure your KPIs remain aligned to strategy – This may sound straightforward, but is easier said than done. As a company grows the strategy may shift from, for example, pure cash collections towards reducing complaints. However, in our experience, this may be an area your KPIs are missing, as getting a true view of compliance and complaints is often a difficult process and very rarely reported through standardised KPIs.
2. Reflect Business as Usual operations – KPIs are an essential method for monitoring your day- to-day-business. For example, a call centre operation has its Service Level Agreements (SLAs) to meet, but having the KPIs that drive them, e.g. average handling time, peak/off peak answer times etc., will enable you to not only manage SLAs effectively, but make them work for you and drive performance.
3. Measure the right things – Not everything is easy to measure, but everything is measurable. It’s not practical to measure every possible factor of your business, but it is negligent to not measure something that is important to your business. For example, if your current KPIs tell you how long an agent is on a call for, but your focus is currently on customer satisfaction, have you set up a method by which customers can air their praise, or grievances?
Just like the Oakland As and their stats approach to winning baseball games, KPIs are the key details you need to find the winning formula. They enable you to play the averages on the core business, rather than relying on the occasional star performance to save the day.
So, are your KPIs really telling you everything you need to know?
By Stephen Hallam , Consultant at TDX Group