By Michael Gidlewski

Success is a subjective term, and probably every person you speak to has a unique definition.

Success in business, however, is most commonly related to the bottom line. Did you achieve or exceed your profit goal? If you did, you are successful. If you did not, you adjust as necessary.

How do we get to that bottom line? What are the elements in this process? Some critical functions may be sales, employee engagement, and customer satisfaction. How do we know where we stand in these areas? We measure them, of course. But what exactly do we measure and how do we use those measurements to drive success?

Key Performance Indicators (KPIs) remove subjectivity and create clarity for the company’s definition of success. There are two types of KPIs: leading and lagging.

Leading KPIs tell the team what they need to do each day to achieve their goals. These are the activities that we know produce results. The purpose of leading KPIs is to tell a story of progress in real time. If communicated properly, the team can take necessary action when falling behind, and alternatively, celebrate when they are winning.

Lagging KPIs show the results of those daily and weekly tasks after the fact. These indicators let us know if we are measuring the right things. If we are meeting our leading KPI goals and our lagging KPIs are, well, lagging … then we adjust our process.

Peter Drucker, the father of modern management, is quoted as saying, “If you can’t measure it, you can’t manage it.”

This is true in my experience, but let’s not forget that measurement without effective leadership is wasted. If we want our KPIs to work for us, we need to involve our team in choosing which functions matter most, what activities produce the highest payoff, and what numbers actually tell the truth about our progress.

We involve our team in this process because they are the people who are doing the activity. They are the front line, and they see the results first. When we allow our team to be involved in the planning process, they want to achieve the goals that were set, that they agreed upon. They want to follow that project to completion. They want to know how their contributions benefited the whole. KPIs drive success when they are defined through collaboration, and when they are communicated throughout the organization.

Another important role in management is providing feedback, and KPIs assist us in this process. Without keeping track of activities and results, performance reviews cannot possibly describe the employee’s real performance. Development opportunities could be missed, and outstanding accomplishments could be overlooked. Feedback is more meaningful and useful when you have measurements to support your discussion. Otherwise, employees may be less likely to accept what you are saying and less likely to improve. Even worse, someone who is excelling at their job and is not recognized for it may be lost to a competitor.

In summary, KPIs matter. Define them, keep track of them, and utilize them. Your team needs to be an integral part of each step as you lead your organization in one direction toward your definition of success.

To learn more about KPIs and how to utilize them to drive success, download this free e-book, The KPI Success Kit – Real Time Key Performance Indicators, from our partner, Results.com, by clicking here.

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Michael Gidlewski is President of West Chester-based Achievement Unlimited, Inc., as well as a growth catalyst and motivational speaker. He works with motivated business owners and entrepreneurs to clearly define the elements of what they dearly want their businesses and lives to look like, then helps them connect all the moving parts that make up those visions to consistent action and habits. Michael can be reached at 610-793-6609 or via e-mail at michael@achievable.com.

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