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Management | Apr 26
Rebecca Reynoso on January 21, 2021 (last modified on April 8, 2021) • 15 minute read
At the beginning of each new fiscal year, you and your team set goals.
Your goals might range from a certain dollar amount in sales to a specific site traffic goal tied to a conversion metric. Whatever your organization cares about, you plan performance metrics for each team to meet and exceed every year.
But creating KPIs – key performance indicators – is only one piece of the larger puzzle. You can’t simply come up with KPIs and let them float aimlessly as the year progresses. You need to manage them by tracking progress and analyzing what the results of your KPIs mean for overall business goals.
To make things easier for you, we’ve compiled the most essential KPI management any leader needs to know to better help their team:
KPI management encompasses the process of developing, executing, tracking, and analyzing a team’s key performance metrics. It’s used to help companies measure the success of business goals set over a period of time.
In layman’s terms, KPI management is how a company measures the goals set forth at the beginning of the year by the year’s end.
Editor’s note: Did you know that with Databox, there is no need to manually share links to relevant KPI dashboards? Just schedule automated snapshots of your dashboards to any Slack channel. You can also get notified whenever your most important KPIs are trending up or down with Databox alerts. See how today.
Key performance indicators matter to every business, regardless of what you call them. You have dedicated performance metrics attributed to your entire team and individual team members as well. But why do they matter?
KPIs help teams track the progress of long-term projects, new process implementations, and find out what’s working and what’s not, so they know better where to spend time, money, and resources. With this in mind, we’ve laid out the best practices for managing your team’s KPIs beyond using a spreadsheet for tracking and annual reviews for follow-ups.
To approach setting KPIs that bring a business benefit to your company, you need to follow a few key best practices that will keep your team on track for success year over year. Here are the five most important KPI management best practices to follow in the upcoming year:
Your KPIs aren’t going to be the same as other teams at your organization, nor will they necessarily be the same as your best competitor. It’s overwhelming to decide what metrics are most important for your team. You obviously need to track revenue, lead generation, profit, closed deals – all of the essential stuff. But what other KPIs are important for your team? And how many is enough?
Our data shows that most teams (70%) track between 10-20 KPIs at one time, while only 30% track more than 20 KPIs annually.
It can be overwhelming to track more than 20 KPIs annually, but if you discover that you (really) have 20+ extremely important performance indicators, by all means, do track them. But, if you’re able to whittle your list down to something more realistic, it’s likely this will help you provide more accurate benchmarks, predictions, and outcomes on your goals at the year’s end.
The best method for making sure your team hits their KPIs? Accountability. And being accountable requires one key thing: visibility. The more visible your KPIs are to the larger organization, the more likely you’ll be held to completing what you’ve set out to achieve.
Declan Edwards of BU Coaching doubles down on the concept of visibility when talking about KPI progress: “One of the most effective ways to manage the performance of KPIs is visibility. Whether it’s a shared file, a series of written KPIs in the office space, or something more tech-driven, like a KPI dashboard ensuring that your KPIs and the progress toward them are visible to everyone in the organization, is a fantastic way to encourage a culture of transparency and accountability.”
Is it a bit intimidating to have multiple eyes on a project or deliverable you’re not done with yet? Absolutely. But in the back of your mind and the minds of your team members, you’ll know that other people are watching, tracking, and cheering your team on to meet and supersede goals you’ve set.
Andres Ossa of Mudango explains how their team uses transparency for goal-setting and clarity across teams. Ossa explains, “About a year ago we decided to make our KPIs public to everyone in the company – even people outside of the sales team. We present this information on the homepage of our internal platform after you login so everyone sees these numbers every day, several times a day. This has improved accountability and transparency. We have used this to create competitions between employees and keep the sales team motivated and performing. Our sales have increased dramatically since we introduced this change.”
Instead of thinking of it as someone hovering over your shoulder, think of public KPI sharing as having a team of cheerleaders with your best interest in mind – holding you accountable for the goals you set for yourself. Plus, using fun activities like friendly competitions among team members or across various departments gives a little pep in everyone’s step, encouraging productivity for everyone.
We all want to dream big. But when setting goals and benchmarks for your team, you want to dream realistically. Your company execs might have big ideas and expectations about what your team can deliver, but your proximity to the staff and daily work means you have a better idea of realistic benchmarking for goals and expectations.
William Taylor of VelvetJobs elaborates on this point: “Making sure that these KPIs are achievable by the team is very important to the company’s total performance. Setting achievable goals and constantly motivating your employees are key to managing the KPIs. Reevaluating the progress is seen helpful and will allow the team to find their problem areas and have a resolution.”
Taylor is right. Shooting for the absolute highest peak of the mountain is ambitious – maybe too ambitious. Make sure you take your team size, individual bandwidth, and factor in extenuating circumstances to leave yourself with some wiggle room.
While you may start the year with 20 employees, consider that some may move on to different opportunities, leaving your team understaffed and overextended. Or maybe a team member needs to take an extended leave of absence halfway through the year. You never know exactly what outside factors will affect the KPIs you set back in January, so try to plan ahead for the worst case scenario and only set your goals within that frame of deliverability.
You want to make sure your KPIs for the fiscal year are within your team’s ability to reach for another reason: bragging rights. If you hit and exceed your goals, you’ll bring returns greater than 100% of completion or success to the following year’s reporting, which will make you look even better.
Whenever you incentivize hitting a goal, people will be more encouraged to work their hardest. If they know there’s a bucket of gold at the end of the proverbial rainbow, the motivation to succeed will be sky-high. Jordan Brannon of Coalition Technologies agrees.
Brannon’s team “encourages ownership and management of KPIs simply by tying them to our team members’ promotions and profit-sharing. Consistency in achieving set KPIs is the biggest determinant of whether or not team members get promoted, taking precedence over tenure and role or position in the company. We keep it simple: achieve your targets, and you’ll have better chances of getting promoted.”
It might seem like a novel idea, but it’s not. Every year, your employees have benchmarks and quotas to hit, and the more successful they are, their eligibility for bonuses, a raise, or a promotion doubles. So framing hitting KPIs in the same way is a tried and true method for motivating your team to be successful.
Editor’s note: Struggling to stay informed on your company’s progress? With KPI Scorecards, receive regular updates on mobile via push notifications, Slack, or via email, and track how your business is performing wherever you are.
If your team sets yearly KPIs in January, does it make sense to avoid checking in on the status of these performance metrics for six or more months? Not at all. And most people would agree. Data shows that more than 87% of teams meet on a monthly or weekly basis to check on the status of annual KPIs.
Elizabeth Weatherby of TOD Pros elaborates on this, noting the importance of regular meetings: “To manage the KPIs we set, we mainly rely on our data, our reporting, and our weekly/monthly meetings to discuss where we’re at. To know whether or not we’re reaching our goals, our detailed reports coupled with the team discussions of our efforts can tell us whether we need to pivot, whether we’ve met our goals, or areas in which we need to increase efforts.”
Simply meeting on a regular basis can be the difference maker in hitting or missing goals, and using data to show where your team stands with its deliverables week over week will help snuff out any problems early on.
Hiba Amin of Soapbox agrees. Amin instructs readers to “Talk about goals every single team meeting and one-on-ones. For a lot of teams, it’s easy to set quarterly goals and review how they did at the end of the quarter. However, when you’re able to track your progress at every team meeting and one-on-one, you’re able to address roadblocks as they come up instead of retroactively.”
This is incredibly useful advice. The more often you discuss the progress of individual team members’ goals as well as teamwide KPIs, the sooner you can catch issues and nip them in the bud. Waiting too long will inevitably cause problems, so checking in on a weekly basis with little to no change is much less stressful than waiting to check in every quarter – or longer – and then noticing an issue you could have prevented from growing out of control had you caught it sooner.
On top of catching errors or missteps before they snowball out of control, checking in on a weekly basis, Dimitris Tsapis of Coara talks about how weekly and monthly check-ins and targets can help with re-focusing goals and adjusting them as time goes on.
Tsapis notes, “Most companies set KPI goals on a quarterly, 6-month, or annual basis. We have found that the best way to manage these goals is to break them down into weekly/monthly targets (make them more attainable). This keeps everyone fixated on achieving just a small milestone on the way to the big goal. For example, if your goal is to hit 10,000 clicks for your blog on a monthly basis, you may only need to increase the number by a tiny bit each week and let compounding do its work.”
Rather than waiting three, six, or 12 months to know what to tweak and enhance, checking in and revising KPIs on a regular basis will absolutely help to hit that “realistically achievable” note we mentioned before. It’s a marriage of transparency and realistic planning. What could be better?
“Set it and forget it” isn’t how you want to approach your KPIs. In fact, there are a lot of things you shouldn’t be doing when it comes to KPI management. We’ll go over a few common KPI management mistakes you should absolutely avoid, including:
While using historical data is a great way to get a general idea of the right KPIs to set for the current year, focusing on things that worked in the past won’t always result in success going forward. Evaluate what worked before and establish criteria to help you set goals for the current business climate and the projected future of your business.
Whether you’re a manager, team lead, or simply a team member, it’s everyone’s responsibility to hold each other accountable. Individual KPIs are usually counted collectively. If each person has a quarterly quota to hit, but one team member is consistently missing the mark, this affects the entire success metrics of the whole team.
Max Whiteside of BarBend is a big fan of accountability. Whiteside says to “Hold your team accountable. Not holding your team to their KPIs is the quickest way to derail progress on any project while simultaneously eroding your credibility as a leader.”
That’s another consideration to keep in mind. If you, as a leader, allow milestones to be missed, people may question your leadership abilities. And who would want that?
KPIs, when done right, are challenging but achievable. If your team isn’t performing it needs to be addressed right away. Treat KPI management like a leaky faucet: it can be fixed once the slow drip becomes a bigger issue (multiple months of underperformance) it’s just easier to take care of it as soon as you notice the leak.”
It’s important to note that not all KPIs are individually set goals, and it all depends on your team’s structure. While nearly 65% of goals are shared among teammates, you can still hold your entire team accountable for missing benchmarks.
That said, whether an individual or group goal, holding everyone accountable with the success of your entire team in mind is one way to make sure everyone’s doing their best to hit their own goals for the greater good.
There are so many tools out there that claim to help you manage your team goals, but with oversaturated markets, how do you know which are the right ones for your needs? We’ve compiled a quick rundown of a few useful solutions.
Before we get into specific solutions, let’s take a quick look at the most popular visual elements people include in their dashboards.
The leaders are line graphs and bar graphs thanks to their easy-to-read nature. The winners on this list are the ones that are clearest, cleanest, and easiest to produce and consume. You want to have visual elements that enhance your data – not make it more confusing.
Priya Kumari of Valasys Media emphasizes the importance of presenting information in an easy-to-read and easy-to-understand format. Kumari says: “Having a visual appeal is important when reporting business KPIs, which is what compels marketers to look beyond traditional Excel reports or PDFs. Effective KPI reporting involves engaging everyone in the business with projected metrics so that your businesses can drive desired outcomes.”
*Editor’s note: Databox has a wealth of dashboard templates you can choose from to help you manage your KPIs throughout the year. See which ones you can integrate into your strategy to start saving time and stress today.
Using an e-commerce funnel dashboard to track your successes and failures will keep you informed on where you need to optimize and what’s working for your business. Track things like revenue growth, average order value, purchases across channels, and more. Get insights to help you hyperfocus on products and channels that draw in more revenue than others so you can align your KPIs to those channels going forward.
You can use a sales management dashboard that integrates with other tools to help you track how many new customers you’ve acquired, how long it takes to close deals, how much those deals are worth in total and per customer. Having a sales dashboard reveal this information to you will help your team tweak KPIs to focus on acquiring customers via the right channels, knowing what stage each is in, and which are most likely to convert at a higher rate.
A marketing dashboard allows you and your team to track metrics such as landing page conversion rate, goal conversion rate, MQL-to-SQL ratio, traffic sources, bounce rate, engagement rate, CTR, cost per click, marketing ROI, and much more with ease and in one place. By tracking your successes and failures, you can quickly identify where and what you need to optimize and what’s working (or not working) for your business.
A finance dashboard allows your team to monitor metrics like monthly recurring revenue, gross volume month over month, and customer/revenue churn rate. You’ll be able to identify daily, weekly, monthly, and long-term revenue growth and fluctuations, which gives insight into adjusting KPIs on revenue goals for the upcoming quarters.
With the right KPIs in place, your team can set more realistic, achievable goals for the short- and long-term. With regular check-in meetings to ensure the KPIs you set in place at the beginning of the fiscal year are steadily on track, you’ll be able to meet and exceed your goals more frequently and with greater levels of accuracy.
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