Are KPI’s a Waste Of Time?
By Brenda Jordan ACMA CGMA BBS, CEO CloudKPI and Accounting for Growth.
“KPI’S ARE A WASTE OF TIME!”
This clearly is not my opinion, but that of a very highly respected partner in a large accountancy practice whom I met recently.
Contrasted with my fervent belief in the power of measuring key performance areas in a business, I needed to drill down a bit further to see how his opinion had been formed, and to explore if indeed, he was right…
There were a number of pointers as to where his strong opinion on the matter had been formed.
Firstly, his practice dealt with very large corporates, and their main service to these corporates was in the area of auditing and compliance.
Secondly, very little time or effort was being spent ‘on the ground’ with these clients, or indeed, in assisting them with their day to day decisions. There was a clean line drawn in the ground as to what were their responsibilities and those of the clients – and measuring key performances and advising on improvements was not their responsibility, but that of the client.
And finally, coupled with this approach, the only KPI’s available to this accountancy practice was annual financial analytics. So….. he was RIGHT!! His use of KPI’s was indeed a ‘waste of time’.
Key Performance Indicators, if used correctly, are an invaluable tool for any business. They give access to timely indicators as to how the different areas in a business are performing, enabling speedy informed decision making and corrective action where necessary.
To use to the greatest effectiveness, there are a number of rules that need to be followed;
1. Select organisation balanced range of KPI’s –
– Financial & Non-Financial
– Selected to evoke most significant impact on a desired outcome
– Endorsed and supported by CEO and management team
2. Limit KPI’s to 10 – any more, and the exercise becomes unwieldy
3. Permit KPI’s to evolve, and measure frequently
4. Strategically review the findings – are goals being achieved?
5. Test, and if necessary, make changes
Key Performance Indicators offer a very valuable insight into the workings of the entire organisation, enabling timely adjustments and decision making to ensure that the overall corporate goals are being achieved. One of the most beneficial aspects of using KPI’s in companies of all shapes and sizes, is the timeliness of access to critical business intelligence within the organisation.
For more information on KPI’s and Business Performance Analysis, contact alanj@accountingforgrowth.ie or call 01-2764254
