KPI tool plays an important role in enhancing the overall performance management of the organization and achieving the set goals. It contributes to improving operational and strategic directions, enhances focus and transparency in work, and supports achieving success.
In addition, the KPI tool measurement tool contributes to motivating employees and enhancing their job satisfaction.
In this article, we will highlight what the KPI tool measurement tool is and its impact on employees.
What is the KPI?
(KPI tool) is a measurable tool used to track progress toward a specific goal. KPI tools help organizations identify strengths and weaknesses, make data-driven decisions, and improve performance.
KPI tool helps every area of business move forward at a strategic level. KPI tools are accurate, unbiased measures of success, and the KPI tool Measurement Tool lets you see the success or failure of specific campaigns and workflows so you can continually improve those insights and move them forward.
What are the types of performance indicators?
- Quantitative indicators
- applied indicators
- directive indicators
- practical indicators
After you get to know the basic concept of the KPI tool measurement tool, you have to know how to set up the basic performance measures.
Examples of measurement tools related to companies
- For example, you want your company to achieve an increase in profits of 25 thousand dollars within two months.
This indicator is very good, because the amount that should be increased in the profits of the company has been determined, and the period of time during which that amount should be increased has also been determined, as That the goal is actually achievable, trackable and measurable.
Therefore, to prepare the KPI tool strategy, and write it correctly, you must first define all the goals that you want to reach with your team, and then you have to start planning to
achieve these goals by developing a tight marketing plan using the appropriate marketing channels to achieve each goal.
- Growth profit margin: To calculate your company’s finances, take its total revenue and subtract only the cost of goods sold. But these costs do not include numbers such as operating expenses, interest payments, or taxes. Divide this number by the total revenue. The higher the percentage, the better.
Web movement standards: It is necessary to know the active and ineffective elements on your website, this gives you the use of the KPI tool tool better for the experiences that visitors get and how many visitors to the site:
- Monthly and annual traffic: Numbers of year after year (annual) appear and month after a month (monthly) changes between each time frame. What are the procedures that help or negatively affect your traffic?
- New visitors versus frequent visitors, this statistic is an indication of the quality of your content to your user base. Does he return them to the site again?
- Conversion rate: Depending on the type of content, the conversion rate can be as powerful as the KPI tool metric. It measures the percentage of visitors who convert. For example, your site receives 300 visitors per month; 30 of them buy something. Your conversion rate is 30 divided by 300.
How to identify KPI tools?
Determining performance indicators requires building a systematic and strategic plan to ensure effective achievement of measurement tool objectives. Here are steps to identify KPI tools:
- Determine your strategic goals: Determine the main goals of the organization. These goals must be specific, measurable, and achievable.
- Determine the main variables: Identify the main variables that contribute to measuring the achievement of these goals. These variables can be numerical or relative. Such as sales revenue, number of new customers, and more. These indicators are quantitative variables (e.g. revenue, number of customers).
- Define measurement criteria: Decide how each sub-indicator will be measured. Are you going to use a quantitative measurement such as a number or a percentage? Make sure to provide accurate and reliable measurement methods.
- Monitoring and evaluation: Implement a system for monitoring and evaluating the sub-indicators regularly. It is possible to use analysis tools and reports to understand the results and identify areas that need improvement.
- Continuous improvement: Draw on the data and analyzes you collect to identify opportunities that allow improving the performance of the measurement tool.
It is worth mentioning that the key performance indicators must be relevant to the strategic objectives of the organization, and subject to analysis. It must also be specific and understandable to all members of the organization to achieve continuous improvement.
What are the best practices for using the KPI tool?
When choosing the key performance indicators to implement in your business, consider the following:
- Choose indicators that are directly related to your goals.
- Think lagging indicators vs. leading indicators.
- Choose realistic, achievable measurements.
The benefits of (KPI tool) and its impact on employees:
There are many benefits associated with the use of the main performance indicators (KPI tool), as it allows the allocation and guidance of the right resources, ultimately improving performance. Some benefits include:
- Real -time monitoring: Since the main performance indicators are continuing, managers can monitor the team’s performance and progress in actual time during the development of the project. This allows the adjustments to make the necessary resources to raise productivity.
- Help avoid delay: Using a working frame (KPI tool tool), the difference can quickly display the place of each task on the timeline, allowing them to know what is on the right track and what may be disrupted. This helps to avoid delay, as adjustments can be made as needed, which helps to ensure the completion of goals.
- Ensure fairness and clarity: Using a KPI tool measurement tool means sharing goals and providing transparency, which often leads to more invested team members.
- Ease: The main performance indicators have the ability to be simple and direct, which is easy to formulate. Since creating the main performance indicators is not a complex process, it can be performed in any kind as soon as their goals are determined.
The use of the main performance indicators as a major tool in institutions, provides the vision of the KPI tool measurement tool, directing efforts, achieving goals with greater efficiency and contributing to strategic decisions.
It must be remembered that quality, effectiveness and continuous improvement are the basis for the success of any institution. By defining and using the main performance indicators properly, to achieve the desired goals more efficiently.
How does the KPI work professionally within your company?
As we mentioned earlier, the KPI tool measurement tool is the standard performance indicator to measure the performance of the work and achieve the specific goals.
There are some steps for the KPI to work effectively within your company, here are some steps:
- Defining goals: You must select the ones whose performance you want to measure, and the objectives must be specific, clear and measurable.
- Define key indicators: Define the indicators that are used to measure the progress of the goals and they must be measurable.
- Define target values: Define target values for each indicator These values should be measurable and achievable.
- Determine the measurement methods: The information necessary to measure the KPI tools should be collected. This data could be obtained by conducting periodic surveys or reviews.
- Data analysis: Analyze the data collected to measure the KPI tool KPI tool and compare the achieved values with the aggregated values.
- Take improvement actions: Identify the areas that you want to improve using the KPI tool measurement tool indicator, and then develop a specific action plan and specific strategies to achieve these improvements.
These steps are general steps for applying the KPI tool measurement tool indicator, professionally within your company, and to be appropriate to the needs and goals of the organization in which you work.
When implementing the company’s measurement tool, the KPI tool identifies the basic indicators that reflect the strategic objectives of the organization, as the company has a clear vision about its performance and achievement of the set goals. It enables employees to achieve outstanding performance and promote innovation and continuous improvement.
How is your company’s performance measured?
Measuring the KPI tool indicator has become one of the necessary measurement basics imposed on the administrative staff of the company, as the huge diversity of work and responsibilities assigned to employees made it difficult to measure randomly. Obtaining appropriate values from the main performance indicators of the financial department is one of the most important factors in reaching financial management success for the company.
As these indicators indicate the correct performance of the financial tasks measured by these indicators, it is necessary to support operations with good measurements, and correct errors in operations with poor measurements.
- Revenue: It represents the revenues that the company achieves from selling its products or services during a certain period of time.
- Profitability: It includes measures such as net profit and profit margin to evaluate the company’s efficiency in achieving profits.
- Working capital
The cash amount within the working capital is allocated to finance daily operations from expenses directly linked to productive operations such as the price of raw materials or contribute to the production process such as electricity fees, employee salaries and workers.
Through the KPI tool measurement tool, the company can motivate and encourage its employees to achieve the set goals and develop their personal and professional capabilities. Where it provides specific criteria for evaluating performance and making strategic decisions.
It can be said that the tool Measurement KPI tool, to effectively promote strategic decision-making and continuous improvement within the company and in the competing business market.