Let’s talk about the last piece of data. In the last two vlog posts, we talked about data in the past (financial statements) and data in the present (scorecards, dashboards, etc.), and now we’re going talk about the future.
How do we use data to take and create the future that we want in our business? What I’m looking for here is a set of metrics for us to measure activity that needs to be happening within our organization. This is with the thought that if we do those things, more likely than not, we will be successful.
Key Predictive Indicators
I like to categorize that group of information as key predictive indicators, or KPIs. With respect to every employee in our business, they ought to have one to three key predictive indicators that you keep them accountable for. For each person in the organization, you want to be able to communicate this to them. What are one or two or three metrics that they are responsible for, and if they do them every day, have a positive outcome on our customers? These should be future-oriented and are not typically financial metrics. They’re activity-based metrics. What sort of activities do they need to engage in?
Think about the sales function as an example. Did they hit their sales numbers this week? Did they hit their sales numbers this month? It’s too late once these have happened, I need to have something that predicts the future. So that might be that I need my sales person to make 15 calls to potential prospects every day. In theory, if they’re making those 15 calls every day, I know that they’re going to convert a certain percentage of those and that’s going to result in the sales numbers that we want to meet.
Now thing about a warehouse department in a business. One of the key predictive indicators for the warehouse might be how many shipments didn’t get out during the day that were supposed to get out. We may say that we need to ship 100 units of this product every day because that’s what our customers are buying. And if we didn’t hit that, we know that we’re starting to get in trouble. There’s a problem there. Maybe the shipments weren’t packed properly or the wrong things were shipped rather than things the customer actually wanted.
How to Develop Those KPIs
Think about activity-based items that your employee needs to be responsible for. Now when you set those key predictive indicators, it is important to do it in conjunction with your employee. The two of you need to sit down and talk about it. What are those one to three activities that they need to do every day in order to be successful at their job and in order to create a good experience for our customers?
If you haven’t developed key predictive indicators for all of your employees, you’re missing a great opportunity. We need to measure what matters. If we’re measuring what matters, we’re also seeing that it gets done. If it’s getting done, we will succeed.
Continued Learning Opportunities
We have a course that gets into the nitty-gritty of how to really set good key predictive indicators. The course is called “Building Your A-Team,” which really looks at helping your employees to understand what it is that you expect of them, how they’re going get it done, and how you are going to measure that.
So take a shot at it. If you need some help, check out that course. I look forward to hearing about your success. Once you’ve implemented this and done some great things or you’re struggling with it a little bit, leave some comments for us or get in touch We’re happy to help you in any way that we can.