Choosing the KPI’s or management indicators for each company is important. Failure to do so jeopardizes good decision-making and the achievement of objectives. Decision-making in a company must be based on quality data and information. For this reason, a series of appropriate management indicators – also known as KPIs – must be established. Their function is important to control the development of strategic planning and to act, as necessary. Aaron Rodriguez, an expert in the analysis of market studies, gives an explanation to understand KPIs and how they are actually applied today.
When it comes to achieving the success of an action or a set of actions, it is essential to select the appropriate indicators. The intention of Rodriguez is to explain the benefits that justify their use and the different types in order to have a minimum base with which to start using them. Management indicators, the KPIs, are used to measure the progress of a strategy, the performance of an action, and whether objectives are being met. The data they provide help to make better decisions and can completely change the course of a plan.
“With KPIs, it is possible to refine a strategy with empirical information since it will be possible to see if the progress of the actions or the results of a previous plan were poor. In this way, processes can be optimized organically and data-driven decisions can be made,” explains Rodriguez.
Human resources indicators are made up of figures or percentages and it is crucial to choose them carefully. It is not enough to have a large number of management indicators; it is necessary to select those that are related to the objectives being pursued. For example, if you want to know the efficiency of a recruitment and selection process, it is important to monitor its performance rate. However, it will not be as useful to pay attention to the internal promotions that have been carried out. Both are indicators related to recruiting personnel, but they affect different situations that you may not need to pay attention to at the same time.
“KPIs are not simple metrics or single numbers. Their raison d’être is that they quantify objectives and measure the progress being made. They are inducers of success by showing how close you are to your goal, which allows you to modify your current strategy or propose new actions,” Rodriguez asserts.
Therefore, they will not show results. This is important since they must be reviewed on a daily or weekly basis. A KPI will not be a metric that is reviewed over long periods of time and that provides data resulting from the conclusion of a process. Moreover, their relevance lies in the impact they have on the key success factors in a company. Management indicators are crucial in this respect, something to which conventional metrics cannot aspire.
Nor do they serve to promote innocuous or potentially negative actions unless they are misinterpreted or the KPI is poorly defined. Their usefulness lies in providing information to make positive decisions, which serve to develop actions aimed at meeting objectives.
Rodriguez adds, “Among the benefits are accountability and transparency. By providing up-to-date and accessible information on the progress of a project, transparency in the company is encouraged.”
Any employee will be able to check progress and contribute their vision, with a consequent improvement in work performance. They combat demotivation at work. Management indicators make it possible to track the performance of workers and get them more involved in projects. As they fulfill the KPIs, it is interesting to recognize their work so that they see that their effort is useful and worthwhile.
Meeting management indicators encourages continuous improvement. Teams have to face the challenges involved in meeting them, which leads them to come up with solutions and learn from their mistakes. If a manager fails, it is possible to know where and try to give him/her the appropriate training to remedy future failures.