All businesses need KPI’s, or key performance indicators, by which they can measure the performance of their business over time. Performance indicators should be structured in the context of the organization’s overall mission and direction and should be part of the strategic management process that connects short-term and long-term goals to specific business objectives. Emphasis should be placed on elements that are truly central to the growth and success of the organization.
There are two major categories of KPI’s: financial and non-financial. Financial KPI’s provide an assessment of the Company’s financial position and are generally based on income statement and balance sheet components. Non-financial KPI’s are other measures used to assess the activities that an organization views as important to the achievement of its strategic objectives such as:
- Internal business practices
- Human resources
Developing KPI’s provides a great opportunity to engage everyone in the organization in the performance management process. A B2B CFO can assist you, not only in the development of key performance indicators for your business, but also in interpreting the results of the measurements on a long-term basis. Contact me for more information.
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