How to Develop Effective and Relevant KPIs
Five steps to developing KPIs and metrics that are relevant to your business (with samples)
If you’re in a management role or starting up a business, you’ll need to work on KPIs. KPIs are valuable for a couple of reasons, primarily: 1) allows senior management to keep score of performance and investments, 2) provides your team with direction and focus.
I would say designing an effective incentive system is crucial to the success of your business.
“Show me the incentive and I will show you the outcome.” — Charlie Munger, VP, Berkshire Hathaway, Inc.
Like many other business and incentive models, there usually isn’t a silver bullet solution. You’ll have to synthesise among a few frameworks, seek and triangulate opinions from others, and come up with a mashed up structure that suits your business.
I’ll be sharing an example of a mashup custom framework further below after obtaining inputs from two useful resources: 1) developing effective KPIs by Bernard Marr, and 2) Google KPI framework.
But first, I’ll share with you a potential approach you can adopt as a start.
