Know your KPIs

- When your boss asks you, how's your team performing? Do you think they're doing good? Is enough of an answer. Of course not. You'll inevitably get the followup question. How do you know they're doing so great. In this lesson, I'm going to teach you how to prepare a key performance indicators report or KPI report. This report won't just help you answer your boss when he or she asks for an update, it will help you make smarter decisions based on real data. So what exactly is a KPI? A KPI is a piece of tracked and trended information that helps explain how your business or sub unit of it is doing. Understanding your team's KPI's is critical. Just like you wouldn't leave the house in the morning without looking in the mirror, you shouldn't be making decisions or answering questions about your business unit without reviewing your KPIs. To start figuring out what your KPIs are, understand that they are the data points that describe each of your teams goals. For example, if you're managing a sales team and your team's goal is to increase sales by 20% versus last year, you need to pick a KPI that describes progress on this goal. Year to date sales versus year to date sales last year would be a great KPI because it shows exactly how your team is performing on this goal. The next thing to consider is whether your set KPI has given you enough information to determine your next course of action. Likely one KPI is enough to understand the challenge you're up against, but additional KPIs will help you determine how to approach it. So I recommend always adding an additional KPI or two. Let's go back to our sales example, say you're lagging behind your target and that your team sales are only up 10% versus year to date last year. You know, you'll need to pick up the pace, but how? Do they need to be making more sales calls or do they need to be converting better on the sales calls they have? By adding in a few additional KPIs, you can easily answer these questions. A couple helpful KPIs would be average daily sales calls and average closing percentage. By looking at the data from these additional KPIs, you can easily determine whether your team needs to work on their conversion or increasing the volume of their calls. Now here's the real secret to leverage KPIs. Once you're able to make database decisions, stop building KPIs. As a rule of thumb, if you can't fit your KPI report on one or max two sheets of paper, you probably have too many. Remember tracking and reporting on data can be time consuming for your team. So don't let your KPI report grow out of control. Use it, don't abuse it. So now when your supervisor says, how's your team performing? You say, well, we're up 10% versus year to date sales last year. So we're working to pick up the pace. Our volume of calls has been great but our closing percentage is lagging a bit. We're working on some new training initiatives this week and expect to see an increase in momentum by the end of next. That's using your KPIs to make informed and reliable decisions. You look capable and your team appreciates the objective guidance and your boss will be happy. So think of your team's number one goal. What is the main KPI you can measure that indicates success? Now add one or two more supporting KPIs and start gathering the data. As you move forward in your managerial career, you'll develop confidence in this kind of database decision-making and your decisions will become more and more reliable over time.