Streamlining your business

Implementing and tracking business metrics

Leveraged properly, metrics can be powerful in driving business success.

Supporting the various strategies across all parts of the business, metrics assist with decision-making, propel improvements and help focus your people and resources on company priorities. Metrics can range from those that are mandatory to those that track increases or improvements in business efficiency, service, profits and savings. 

PINPOINT THE RIGHT BUSINESS METRICS TO TRACK

Measuring and managing with metrics is essential to keeping your business on target and competitive. Without metrics, you can’t accurately tell where your business has been, where it’s going, whether something is going wrong, and when you reach targets. You must be able to understand how well each part of the business is performing and how this performance affects the financial bottom line.

However, it’s critical to choose the right metrics parameters. Measuring with the wrong metrics can do the business and your employees more harm than good. For example, giving your warehouse drivers delivery targets that require them to speed, or fail to take rest breaks is dangerous and irresponsible.

Metrics need to be simple so all employees understand them and what is expected of them. They also need to be measured weekly so there’s time to correct a negative situation.

The aim of setting metrics is business improvement, so rather than setting easily achievable targets, they should be challenging. However, the challenge is not to set unachievable targets or employees will feel defeated even before they begin.

MONITOR THE HEALTH OF THE BUSINESS

Metrics can be a powerful tool for informing and guiding decision making at all levels of your business. They must focus on areas of most importance to the business, be clearly defined, implemented correctly, completely understood and broadly communicated.

Some best practice steps for implementing business metrics

1. Know what to measure. Starting with your core values, vision and company mission, consider:

  • What six things will most impact the business in the next 12 months?

  • What are specific revenue objectives, both for the year and for each quarter?

  • What are the ‘subjective’ criteria for success in the next 12 months?

2. Set yearly and quarterly company and departmental goals. Create individual targets from these.

3. Define the metrics clearly so you can easily benchmark successes. They shouldn’t be complex or difficult to explain. Use the SMART (specific, measurable, achievable, relevant, time-based) model.

4. Avoid using broad goals without specific metrics tied to them. This can lead to different conclusions as to whether or not a goal was met. 

5. Get buy-in from senior management and employees. Approval and interest from senior managers are important, particularly if the metric is a new initiative. 

6. Ensure you are using measurement tools to generate the data needed, which are reliable and provide the same answer no matter who calculates it. They should also provide real-time feedback so you can pull data easily and quickly.

7. Keep them manageable. It’s better to have six meaningful metrics your organisation will use than 60 it won’t.

Use results to drive business improvements

Learn from your business metrics. Don’t sit on the results, whether they’re good or bad. Ensure you have a method to report the performance results in a timely, meaningful manner. Share them with the business and encourage feedback – why was there success or failure in particular areas? 

Your business is evolving, so you’ll need to review your metric process from time to time. Make sure the metrics still measure what they were intended to measure. After all, if the metrics are out of date, then what’s the purpose of retaining them?

Transparency and honesty are integral to success. Although it may be tempting to massage the data because the business isn’t performing as well as planned, understanding the company’s true position is the first step toward improving the situation.

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