How to Design KPIs in Crisis Times

1. Introduction: As businesses continue to adapt to a post-pandemic world, business leaders and decision-makers must be equipped to determine and redefine what is best for their unique work, workplace, and workforce. It's time to step up and deliver. Our course will stand on four main pillars. The first one is about designing KPIs during COVID-19 pandemic. The second pillar, will be about redefining business objectives during crisis times. The third one will be about developing new work methodologies and tools to keeping up new global trends. And finally, setting performance measuring criteria for employees and all business functions depending on the work conditions. To move on easily. In this course, you should have a basic understanding of key performance indicators. Also, you will do all practical activities easily if you have a basic understanding of Microsoft Excel, this course is for business leaders, management consultants, managers, project managers, entrepreneurs, business professionals, business analysts, directors, and controllers. We will move in this course from topic to topic that will serve its purpose. The main methodologies and terminologies that we will talk about is KPI, environmental scanning, organization chart, SOP, critical success factors, corporate social responsibility, management by objectives. OKR, balanced scorecard. And finally, before the closure, we will do a case study that will cover all topics, terminologies, and methodologies that we are talking about. So I think we should start. 2. What is KPI?: I don't need to tell you how important is to track the success of your efforts without a clear simple, accessible way to monitor and evaluate what's working and what's not. How do you know you are on the right track? And how can you keep honing your strategy to boost performance all of the time when it comes to building successful products, data is the most powerful tool you have. Distilling complex data into clear KPIs illuminates the vital signs of a product's health. The right KPIs will measure progress, diagnose problems, and serve as the fuel behind informed decision-making, leveraging the power of product, KPIs begins with first defining the most impactful metrics for your business. And then, in ensuring that the bar of this data is easily accessed by your organization, key performance indicators are one of the most important business metrics for a particular organization or industry. Establishing a measuring the right KPIs is a key step in your business road to success. The ultimate purpose of any business is to make money, right? Even if you are a non-profit, you need to know you are spending every penny that comes your way and the best, most efficient and productive way you can. This means your KPIs are the fundamental driving force of your organization. You need visibility over all aspects of cash flow, profit or loss, and other activities you need to measure in your organization. You need them fast, and presented in a clear, easy-to-digest format. A KPI, or Key Performance Indicator, is a measurement that evaluates the performance of a business. It measures the success of a company at reaching its operational and strategic goals on different performance aspects. KPIs can be high level monitoring the global performance of a business, or more low-level focusing or processes' or individual's performance. So if we want to define KPIs, we can say that KPI is refer to a set of quantifiable measurements used to gauge a company's overall long-term performance. KPIs specially help determine a company's strategic financial and operational achievements, especially compared to those of other businesses within the same sector. 3. What are KPIs benefits for businesses?: Although the term KPI and goal are often used interchangeably, they are not really the same. Accompanies goal define the outcomes that's desires to achieve in a form of measurable results. KPIs, on the other hand, are indicators on the performance that tell whether the company is on track to achieve those goals. So why should you have KPIs for your organization? Here are the top six reasons. The first reason is transparency around performance. Without knowing what the goals of the organization are, there is no way to gauge a team or individual's performance. Therefore, no ability to guide the team to improve or optimize with clearly defined KPIs, it's easier to give accountability to the specific team members and achieve transparency. Teams can collaborate better when they know exactly where to focus their energy. The second reason is accountability within the team numbers do not lie. That's easy to answer the status update related questions when KPIs are clear as day performance analysis and making personal decisions is all easier. Work is not measured by irrelevant benchmarks such as hours at work or number of emails sent per day. KPIs let team members take responsibility of their time on the job and making sure that they align efforts with goals. The third reason is they help with decision-making, This is logical. When you implement KPIs, you will automatically need to develop systems/processes to measure them with this information, the business intelligence gained with allow management to make more informed decisions. Four, you can measure your targets so they may be easily confused. KPIs are not exactly an organization's goals themselves, they are a measurement of them. A KPI can indicate that your sales team is only generating 30% of the target number of leads that you have set as a goal, as a manager in this situation, you are instantly aware of your sales team's progress and the reason for not hitting the desired numbers of leads. When you are able to measure your goals this way, it gives you the opportunity to see where the gaps in your efforts might be and subsequently make decisions that help you reach your goals faster. 5, to analyze patterns over time. If you measure the same KPIs quarter over quarter, you can begin to detect patterns in your numbers. These patterns can help you optimize your business strategies. This can allow you to make predictions about the slow or high-performing quarters, or identify over or underperforming team members and help them improve their efforts. Six, you will get an integrated overview. One of the main reasons to invest in a KPI system is integration. The data flow from different sources can be a big complication if no integration methods are applied. Using a KPI system allows all your departments to enter the data manually into one big system or the program can connect to different data flows automatically, whichever method is used, you can be sure that the integrated connection will boost your business management. 4. SMART KPIs: Designing SMART Key Performance Indicators, KPI is crucial for effective performance management and goal achievement in organizations. SMART is an acronym that stands for specific, measurable, achievable, relevant, and time bound. Here is how to design Smart KPIs Specific Define your KPIs with clarity, Be precise about what you want to measure and accomplish. Avoid vague or broad objectives. Ask questions like why, who, where, and how, to ensure specificity instead of vague KPI like improve customer satisfaction. Make it specific by saying increase customer satisfaction score by 10% in the next quarter. Measurable. Ensure that your KPis are quantifiable and can be measured objectively. This requires using concrete metrics or data points. define how Will you measure and collect data For the KPI. It should be based on factual information, not opinions. Example, instead of "improve employee productivity", "increase the number of units produced per hours by 15%". Achievable. Make sure your KPIs are realistic and attainable within the given resources and constraints. Avoid setting overly ambitious or unattainable goals as they can lead to frustration and demotivation. Consider past performance and industry benchmarks when determining achievability. example: A few organization has never achieved a 20% growth rate. Setting KPI of a 20% revenue growth in the next quarter might not be achievable. Relevant Ensure that your KPIs align with your organization's goals and objectives. This should be relevant to the overall mission and strategy. Avoid KPIs that don't contribute to the organization's success even if they are easy to measure. review KPIs to ensure they are meaningful and support the bigger picture. Example: If your organization's main focus is cost reduction. KPI related to increasing customer satisfaction may not be as relevant. Time bound specify a clear timeframe for achieving the KPI. Setting a deadline provides a sense of urgency and accountability. Ensure that your KPI is have a defined start and end date or a timeframe for regular reporting example. Instead of reduce project delivery time, reduce project delivery time by 20% within the next six months. When designing the smart KPIs, it's important to involve relevant stakeholders, gather input, and align them with your organization's strategic goals. Regularly monitor and review your KPIs to assess progress and make adjustments if necessary. Remember that KPIs should be flexible and editable as circumstances change. And they should serve as a tool for continuous improvement and decision making within the organization. 5. Financial KPIs: The financial sector needs to regularly track, monitor, and analyze a company's performance in order to keep a healthy status and avoid monetary bottlenecks. That's why financial metrics have a special significance in every company and the team that deals with them needs proper dashboard reporting to effectively manage and optimize those processes. A financial KPI is a measurable value that indicates a company's financial results and performance, provides information about expenses, sales, profit, and cash flow in order to optimize and achieve business financial goals and objectives. And her is the complete list of the top 16 finance KPIs or metrics that every financial professional needs to know. Gross profit margin, how much revenue you have left after COGS? operating profit margin. How is your EBIT developing over time? Operating expense ratio How do you optimize your operating expenses? Net profit margin, how will your company increases its net profit? Working capital, is your company is stable financial health, current ratio. Can you pay your short-term obligations? Quick ratio, is your company's liquidity healthy? Berry ratio, Are you losing money or generating profit? Cash conversion cycle How fast can you convert resources into cash? Accounts payable turnover Are you paying expenses at a reasonable speed? Accounts Receivable turnover How quickly do you collect payments? Vendor payment error rate. Are you processing your invoices productively? Budget variance. Is your budget accurate and realistic? Return on assets. Do you utilize your company's assets efficiently? Return on equity. How much profit do you generate for shareholders? Economic value added? How much profit do you generate for shareholders? 6. Manufacturing KPIs: Manufacturing is all about constantly uncovering ways to streamline your operations to lower costs and boost your productivity, no matter the industry you operate in, the goal is to produce more for less, and understanding your manufacturing processes is the first step toward ultimately improving them. Having a clear picture of your manufacturing KPIs gives you an overview of how efficiently your production is accomplished in a straightforward and easy to understand format. A manufacturing KPI is a well-defined measurement to monitor, analyze, and optimize production processes regarding their quantity, quality, as well as different cost aspect. They give manufacturers valuable business insights to meet their organizational goals. Here is the complete list of the top 16 manufacturing KPIs and metrics. that every manufacturer needs to know. Production volume, track the quantities that you are able to produce. Production downtime, analyze and optimize your maintenance. production costs, monitor the costs implied in the production. Overall operations effectiveness OOE, evaluate your operational efficiency. Overall equipment efficiency OEE. Assess the scheduled efficiency. Total effective Equipment performance, TEEP, track overall effectiveness. Capacity utilization. Maximize the use of your capacities. Defect Density, track the damaged items right away. Rate of return. Measure how many items are sent back. On-time delivery, ensured your products are delivered on time. Right first time, understand the performance of your production process. Asset turnover. Acknowledge your assets in relation to your revenue. Unit costs, track and optimize your units' costs over time. Return on assets. See how profitable your business is relative to its assets. Maintenance costs, evaluate your equipment costs in the long term. Revenue per employee, measure the success of your workforce. 7. Retail KPIs: For retailers today, success is all about understanding customer trends and adapting to changes that happened nearly every second. If you operate a physical or e-commerce store, you understand how quickly things can change and how important it's to measure every aspect of your business performance, the right metrics not only tell you how well your business is functioning, but can help identify areas of improvement, places where you can generate more savings and even how to organize your store. Retail KPI is a performance measurement to track important retail processes in an efficient way. These KPIs are used by retailers to increase profits by identifying customer patterns as well as bottlenecks within the ordering or shipping process. Here we present a complete list of the 16 most important retail KPIs and metrics that modern retailers must know. Website traffic or foot traffic. Evaluate your marketing and ads' efforts. Average transaction size, analyze the purchasing behavior of customers. Average units per customer. Get insights on customer behavioral trends. Total volume of sales, track your sales numbers over time. Sell-through rate, compare the inventory received and sold back order rate, measure the ability to fulfill customer orders. Rate of return, evaluate the number of orders returned to you. Customer retention. Learn how to keep customers in the long run. Retail conversion rates, improve your retail conversions. Total orders. See the evaluation of orders placement. Total sales by region. Evaluate how much you sell and where. Order status, track and analyze your orders in real-time. perfect order rate, see how many orders are delivered without incident. Return reasons. Get insights on why customers return their older. Gross margin, return on investment. GMROI. Track the relation between investments and returns. Monthly revenue per employee. Evaluate the value of your employees. 8. Logistics KPIs: Logistics KPI or metric is a performance measurement that is used by logistics managers to track, visualize, and optimize all relevant logistic processes in an efficient way. Among others, these measurements refer to transportation, warehouse and supply chain aspects. And her is the complete list of the most important logistics KPIs and metrics. Shipping time, spot potential issues in your order fulfillment process. Order accuracy. Monitor the degree of incidents. Delivery time. Track your average delivery time in detail. Transportation costs, analyze all costs from the order placement and delivery. Warehousing costs. Optimize the expanses of your warehouse. Number of shipments. Understand how many orders are shipped. Inventory accuracy, avoid problems because of inaccurate inventory. Inventory turnover. Track how many times your entire inventory is sold. Inventory to sales ratio. Identify a potential overstock. 9. Procurement KPIs: A procurement KPI or metric, is a measurable value that track all relevant aspects of obtaining or buying goods and services. These KPIs enable the procurement department to control and optimize the quantity, quality, cost, timing, and sourcing of purchasing processes. Here is the complete list of the most 15 important procurement KPIs and metrics. Compliance rate. Understanding if suppliers fulfill your requirements. Number of suppliers, track your level of dependency towards your suppliers. Purchase order cycle time, know who to address your urgent order to. Supplier quality rating. Analyze the quality of your supplier. Supplier availability. measure suppliers' capacity to respond to demand. Supplier defect rate. Evaluate your suppliers individual quality. Vendor rejection rate and costs. Examine your quality management strategies. Lead time, understand the total time to fulfill an order. Emergency purchase ratio. Track the number of emergency purchases. Purchases in time and budget. Monitor purchasing time and budget. Cost of purchase order, control the internal costs incurred by each purchase. Procurement cost reduction, streamlines the tangible costs savings. Procurement cost avoidance. Avoid potential extra costs in the future. Spend under management. Track and optimize your expenditures. Procurement return on investment. Determine the profitability of investments. 10. Sales KPIs: Sales KPI's are a key measure of a company's growth and are used to track performance and the overall effectiveness of various revenue-generating activities within an organization. Many other metrics contribute to these numbers. While tracking grow sales and other key figures can seem daunting using effective sales dashboard will help provide a sense of your sales funnel. These examples of sales KPI's for requesting this information from your accounting team and sales managers. Gross and net profit margin. Gross profit equal net sales, subtracted cost of goods and services. Net profit equal gross profit. Subtract total operating expenses plus taxes, plus interests, plus depreciation and amortization. Sales revenue, price per unit sold by number of units sold equals revenue. Prospecting activity. Have your sales teams measures the amount of time, effort, and resources they put into seeking out new leads. Keep track of client calls and e-mails, meetings with prospects products and services, Deimos and any other applicable activities. Prospecting activity is more a cloud of sales KPI's than a single metric. Customer retention. You can measure your change in customer volume during a certain period. Subtract your customer most figure from the number of customers you have gained. Note that this formula may, will return a negative value. Churn rate. Churn rate figures. You can answer the crucial question. Do you attract more customers than you lose? Divide the number of customers you have lost or gained during a period by a total number of customers you serve in that time. 11. HR KPIs: Your company's Human Resources are its most essential asset. So, it only makes sense to form the best possible understanding you can about them. Regardless of your industry, your business can't function without people. Making sure you are doing it the right way and managing new hires, their satisfaction and their overall productivity is crucial. Here's a complete list of the top 15 human resources KPIs and metrics that every HR professional and manager should know. Absenteeism rate. Evaluate the engagement of her employees. Overtime hours. Monitor your employees workload in detail. Training costs. Analyze the investments in your employees. Employee productivity. Track the overall effectiveness of your workforce. Talent satisfaction. Employees are satisfied in the long term Cost per hire analyze what it takes to find the perfect fact. Recruiting conversion rate. Find the best recruitment method Time to fill. Monitor how long do you need to find a new employee. Talent rating. Assess the quality of your employees. Employee turnover. See how your retention efforts work. Talent turnover rate. Evaluate how many talents you continually change. Dismissal rate. Find out if you are recruiting the right employees. Female to male ratio. Understand the gender diversity in your company. Part-time employees. Watch the evaluation of part-time workers overtime. Average time. Stay. How long your employees stay in your company? 12. CS KPIs: No matter what industry you work in, your customer are your most important asset. It makes sense to know exactly how we treating them, how effectively you can assist them, and the level of satisfaction to better understand your customer support operation and how will it realize its objectives. It's vital to establish customer service KPI's and measure them effectively. Let us discuss the key metrics on how to measure customer service success with higher accuracy. First Response Time (FRT), average first response time refers to the time between the chat made by the customer and agent responses. Higher scores from customer service evaluation indicates that your agents are enthusiastic about attending customers. How to calculate the first response time, time of first response, substract time of customer request. Customer retention rate. The best way of evaluating customer retention rate KPI by using the Below formula. Customer retention rate equal CE, That indicates the number of customers at the end of the process. Substract CN, that means the number of new customer acquired during the process divided by CS That stands for the number of customers at the beginning of the process. By 100, you will get the percentage. Customer satisfaction score, CSAT. You can directly ask your customers to rate their satisfaction across different communication channels. How to measure it? Number of customers who responded as satisfied divided by number of total customers surveyed by 100. And you will get the percentage First Contact resolution, FCR. The FCR Performance Indicator gives you insights on how good your agent and addressing a problem without needing multiple interactions. You can optimize the FCR metric by training your customer support team to improve their communication skills and deliver quality service. You can provide live chat scripts and customer surveys to improve resolution in the first interaction itself. 13. 18 practical steps to design KPIs during crisis times: Here is a practical step by step approach to design KPIs during crisis times. One, identify the crisis impact. Start by assessing the specific impact of the crisis on your organization. Understand the challenges it presents, such as supply chain disruption, reduced demand, financial constraints, and workforce issues. Two emergency response plan. Develop an emergency response plan that outlines the immediate actions to be taken. This should include clear objectives to address the most pressing issues. Three, prioritize setting, prioritize areas that require the most attention. This could be related to cash flow, cost reduction, employee safety, or customer attention for cross functional teams. Assemble cross functional teams to cooperatively design KPIs, include representatives from various departments to ensure a well rounded perspectives. Select critical metrics. Identify the most critical metrics that directly address the current crisis. For financial stability, this code includes metrics like cash reserves, revenue projections, or debt management. Six, Smart KPIs. As we mentioned before, we should apply the smart criteria to these selected metrics. Ensure they are specific, measurable, achievable, relevant, and time bound to the crisis context. Seven, Benchmark and historical data. Use historical data to establish a baseline for your KPIs. This will help you understand the impact of the crisis and set achievable targets. Emergency dashboard. Create a real time dashboard to monitor these KPIs. Use data visualization tools and dashboards to make the information readily available to decision makers. Nine communication plan. Develop a communication plan to keep stakeholders informed about the organization's performance and the steps being taken. Transparency is crucial during crisis. Ten scenario planning. Incorporate scenario planning into KPIs. Consider different scenarios, best case, worst case, and most likely. And set KPIs targets for each scenario. 11, regular review, schedule frequent reviews for U KPIs, and adjust them as necessary based on changing circumstances, weekly or even daily assessments may be required during crisis. 12. Employee engagement metrics include metrics related to employee ping and engagement. Employee morarale and performance are critical during difficult times. 13, supply chain resilience. If your crisis involved with supply chain disruptions, establish KPIs related to supply chain resilience, such as inventory level, lead times, and supplier performance. Poteen customer centric KPIs. If your crisis affects customer demand or satisfaction, Design KPIs that focus on customer centric metrics like customer retention, NPS scores or order fulfillment times. 15 resource allocation. Assess resource allocation based on your KPIs. Shift resources to areas where they are most needed, but ensure efficiency and cost effectiveness. 16, training and awareness. Ensure that your team is trained to interpret and act upon the KPIs effectively. Create awareness of the KPIs importance. 17, feedback loop, establish a feedback loop for continuous improvement. Encourage teams to provide feedback on the effectiveness of KPIs and make necessary adjustments. Finally, 18, legal and compliance KPIs. If the crisis involves legal or compliance issues, design KPIs that track compliance, regularity adherence, and legal risk management. Remember that the key to practical solution in crisis management is adaptability. Your KPIs should be responsive to changing circumstances and your organization should be prepared to adjust strategies and tactics as the situation evolves. Regularity assess your KPIs and communicate your progress to your team and stakeholders. 14. Most important 17 KPIs in crisis times: During crisis times, several key performance indicators become particularly important as they can help organizations navigate the challenges effectively. And here is a complete list of the most critical KPIs during a crisis. One, cash flow and liquidity. KPIs related to cash reserves or capital and liquidity are vital for ensuring financial stability during a crisis. These KPIs help track the organization's ability to meet short term financial obligations. Two, revenue and sales metrics. Monitor KPIs related to revenue, sales and customer acquisition and retention. In a crisis, it's crucial to understand how demand is affect and whether adjustments are needed. Three, cost reduction and expense management. KPIs focused on cost reduction, expense control, and operational efficiency are essential to conserve resources and maintain profitability. For, profit margin. Tracking gross and net profit margin helps assess the financial health of the organization and identify areas where profitability can be enhanced. Five, employee productivity and engagement. Employee-related KPIs, such as productivity, absenteeism, and engagement are crucial for maintaining a motivated and productive workforce during crisis times. Six, supply chain resilience. Again, KPIs related to supply chain performance, including lead time, supplier reliability, and inventory levels are critical in managing disruptions and ensuring the availability of essential resources. Seven, customer satisfaction and retention. Measure customer satisfaction, net promoter score NPS and customer retention rates satisfied and loyal customers can help stabilize revenue. Eight, debt management. Monitor KPI is related to dept levels, interest coverage, and debt pre-payment schedules. Effective debt management is essential to avoid financial strain. Nine, operational continuity. Assess KPIs that track the continuity of essential operations and services. This ensures the organization can continue to deliver its core products or services. Ten, risk assessment and mitigation. KPIs related to risk management, compliance and legal obligations are vital for identifying and addressing potential threats and liabilities. 11, inventory turnover. For businesses with inventory, tracking inventory turnover and optimizing stock levels are important to prevent overstocking or stock out. 12, strategic agility. Measure the organization's ability to adapt its strategies and tactics in response to changing market conditions and crisis-related challenges. 13, social responsibility and repetition. Keep your eyes that assess how the organization is perceived by its stakeholders and the broader community. This includes metrics related to Corbet social responsibility and brand repetition. 14, IT and cybersecurity metrics. In an increasingly digital world, it's essential to monitor IT performance and cybersecurity KPIs to ensure data security and business continuity. 15, emergency response metrics, KPIs that measure the effectiveness of emergency response plans and the organization's ability to manage crisis. 16, legal and regularity compliance. Ensure that the organization is meeting legal and regularity requirements, as non combliance can lead to costly consequences. 17, scenario planning and sensitivity analysis. Keep your eyes that evolve scenario planning and sensitivity analysis to evaluate how different potential outcomes of the crisis may impact the organizations. The specific KPIs that are most critical during a crisis will vary depending on the nature of the crisis, the industry, and the organization's unique circumstances. It's essential to adapt and prioritize KPIs that are most relevant to your organization's immediate needed and changes regularly monitor and adjust these KPIs to respond effectively to evolving crisis conditions.