A question frequently asked by businesses of all sizes is what should my Key-Performance-Indicators (KPIs) be and how many should I have? They often look to other companies in their industry including suppliers and customers to see what they may use to run their business. Frequently, they are fraught with frustration by the lack of data in the public domain.
Among the difficult subjects for FP&A and management, there is the very “sensitive” relation between budget or forecast and managers compensation scheme.
Many will still argue that target setting works. “What gets measured gets done”. Yes, targets do work. That is actually the problem. Managers hitting their target is, however, no guarantee whatsoever that this was their best possible performance, given the circumstances.
Key Performance Indicators (KPIs) are metrics that represent how various drivers of the business are performing. These drivers are often both financial and operational in nature. And while there is no one-size-fits-all when it comes to choosing the "right" metrics for your business it is critical that the data used be consistent and accurate.