Measure Your Performance & Stay on Track

  • Posted by FinancialZone
  • 05 January 2011
  • Strategies

It happens to most organizations.  You get all excited about the New Year ahead - possibilities are endless and amazing opportunities are sitting right in front of you.  The World Is Yours!  So what's stopping you?

If you're like most of us, it's probably focus, not drive.  We all know how to work hard, but we don't always work smart. Measuring your performance allows you to stay on track.  This is how you grow and achieve results.

Measuring your performance isn't just about looking at your financial reports or seeing how much cash you have in the bank.  It's about developing a Plan, directing every effort in your company towards the achievement of those goals, and then periodically comparing your results to your plan.  So in order to measure your performance, you first need a solid plan (I won't get into how to develop a plan here - probably in another post).

To measure your performance, there are 6 Steps you must master.

  1. Define your Key Performance Indicators (KPIs).  KPIs can be any measurable item that tells you something about your company's performance.  It doesn't have to be a financial figure, and KPIs can be as broad or as specific as you'd like.  See Tables below for KPI examples.
  2. Prepare a monthly KPI forecast - Here's an example.
  3. FinancialZone Sample Forecast

    Create KPI Forecast at end of year or beginning of new year

  4. Focus on KPIs that drive results, not just provide information.  For instance, to achieve the March sales goal in the example above, you may want to focus on getting new customers.  If you focus only on getting New Leads, you are not likely to hit your Sales goal, because new leads don't necessarily drive revenue.  Although New Leads are important, they should be considered as secondary to getting New Customers.  Of course you need to keep the pipeline full, but my point is that you need to understand the chain of command.
  5. Track your actual KPIs.
  6. FinancialZone Sample Actuals

    In April you will populate actuals data for March

  7. Compare actuals to forecast for both individual months, and Year to Date.  This will tell you not only how you're doing for a short time segment, but even more importantly, how you're doing compared to the overall plan.  Are you on schedule?  If not, is it favorable or unfavorable, and is it significant.  Is your plan still reasonable?  Are you staying focused?  Maybe you're behind on your Sales goal for the month of March, but you're actually ahead of schedule Year-to-date.
  8. FinancialZone Sample Scorecard

    Compare MTD - Actuals vs. Forecast, YTD - Actuals vs. Forecast

  9. Correct or adjust your plan if it's no longer reasonable.  Be careful with this though.  If you adjust your plan too much, then it's not really a plan.  Instead your plan just becomes a reflection of your performance. Instead, make sure that your performance is a reflection of your plan.

There are a lot of different ways of compiling this information.  Some are manual and some are automated.  For instance, you can use Excel Spreadsheets, but this is a manual process, unless you're using Excel as a data connector. There are various 3rd party applications that will extract your KPIs from QuickBooks and other applications such as your CRM so that you can experience more of an on-demand dashboard for your viewing pleasure.  But however you do it, just make sure it gets done consistently and timely.  If you do I promise you it will help you Stay On Track!

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