Setting Measurement Targets

(How to manage the key measures of

success within your business)
If you need help implementing this or with any other aspect of
structuring your business, please get in touch:

alansmith@[Link]
07972 310997

1
 Setting Objectives

Performance Objective
This should represent the overall goal you are aiming for, which should of course be
aligned with your company’s wider annual objectives
(eg. you may want to lose 2 stone in weight, thus getting down to 12st by the end of the year)

Key Performance Indicator (KPI)

This should represent progress on the main activities that are necessary to be
performed in pursuit of the performance objective
(eg. In order to lose 2 stone in weight you will need to visit the gym and reduce your calorie intake)

Key Performance Result (KPR)

This is the outcome you should expect to see as a result of the activities that are
being conducted on a regular basis
(eg. checking in on your weight each week as you stand on the scales)

Alan Smith | 07972 310997 | alansmith@[Link] 2

 Performance Measurement

Performance Key Performance Key Performance

Objective Indicator Result
# gym visits/week
Weight at end of each month
Weigh 12st by 31st Dec

# calories/week

The Goal! The Activity. The Result.

Alan Smith | 07972 310997 | alansmith@[Link] 3

 Performance Objectives for Financial Year
This is an example of what KPIs could look like for some of the functions of a manufacturing business…

Performance Objective KPI KPR

Financial
Increase Revenue to £ XYZ Increase # estimates converted Revenue Growth YoY
Increase client base
Increase Net Profit to £ ABC Job Costing by job Net Profit Growth YoY
# variations issued
Create Cash in Bank Reserve of £XYZ Speed of invoicing / collection Cash in Bank each week
Improve Procurement Procurement program # Credit Accounts with suppliers
Operations
Improve On Time/In Full Delivery to 95% Turnaround time of Design as % of project Snagging Time
Production Program per job Days complete before/after deadline
Reduce Wastage 100% issue of packs # skips YoY
Improve Quality Factory Quality Checks # items reworked
Sales & Marketing
Grow Existing Customers by XYZ% Increase # of jobs done per customer Monthly Revenue & Profit Growth YoY
Growth in Average £ Sale per job
Increase Customer Base by # estimates made # & quality of Customers converted
X target Market Customers # active customers / prospects
Build Online presence to generate X # & quality of blogs/free tools shared # online enquiries converted
inbound enquiries per month # & quality of Social media engagement
(eg likes, shares, comments)

See next page for other KPI / KPR suggestions…

Alan Smith | 07972 310997 | alansmith@[Link] 4

 KPI / KPR Selector

Marketing Financial Operations People Suppliers Innovation

& Sales
1. Market share [Link] [Link] per unit 1.# of employees 1.# of employees [Link] from new
2. Leads by source [Link] margin 2.# of employees 2.# of managers 2.# of managers products
3. # of prospects [Link] margin [Link] utilisation [Link] / employee ratio [Link] / employee ratio [Link] from new
4. Conversion ratio [Link] / Expense ratio [Link], eg. days lost or [Link] [Link] market segments
5. Average £ sale [Link] sales outstanding comp claims 5.# new employees 5.# new employees [Link] from new
6. Profit per customer [Link] on investment [Link] orders [Link] training per employee [Link] training per employee geography
7. #. of transactions per [Link] in bank [Link] 7.£ training per employee 7.£ training per employee 4.# of new customers
customer [Link] of goods sold [Link]-work (#, %) [Link] per new hire [Link] per new hire [Link] to market for new
8. Customer satisfaction [Link] turns per year [Link] time 9.% employees fully trained 9.% employees fully trained products
9. # of new customers [Link] flow [Link] data [Link] turnover [Link] turnover [Link] to market for new
[Link] awareness [Link] on capital [Link] [Link] satisfaction [Link] satisfaction services
11.# of customers [Link] overdraft 11.#. of complaints [Link] of output [Link] of output
[Link] [Link] [Link] of customer [Link] of performance [Link] of performance
[Link] mix [Link] accounts Complaints [Link] of capabilities [Link] per employee
[Link] profitability receivable 13.# orders failed before •Learning •Sales
15.# of orders [Link] accounts payable [Link] •Skills mix •Productivity
[Link] retention [Link] per square ft 15.# orders not delivered 15. Core value [Link] of capabilities
[Link] value of a [Link] on time •Customer focus •Learning
customer [Link] expenditure [Link] in progress •Innovation •Skills mix
[Link] to equity ratio [Link] hours 16. Output per employee [Link] value
20.R&D expenditure [Link] •Sales •Customer focus
[Link] expenditure [Link] time •Productivity •Innovation
[Link] expenditure [Link]
[Link] [Link] costs
[Link] assets [Link] sale
[Link] liabilities •Warranty claims (#,%)
[Link] expenses •Repairs
[Link] debts •Returns
[Link] given/ taken •Defects

This is not an exhaustive list and should be used to stimulate further ideas on the key measures of success for each role

Alan Smith | 07972 310997 | alansmith@[Link] 5

 What do you measure?
Eg. Revenue

Period Target Actual Variance % + (-) Last Year Increase

Jan 54,000 55,414 1,414 2.6% 30,000 25,414
Feb 63,000 60,102 -2,898 -4.6% 60,000 102
Mar 45,000 63,001 18,001 40% 25,000 20,000
Apr 87,000 86,999 -1 0% 70,000 16,999
Ma 54,000 56,302 2,302 4.3% 41,000 15,302

Once you’ve chosen the KPIs and KBRs that will move you closer to your Performance Objective you’ll need to create a
‘dashboard’ of measurement. Just like a car dashboard that tells you the key information to ensure the car is running
smoothly, so too does a Business dashboard tell you how smoothly your company is running.

The best way to measure the performance of your business (and of each member of your team) is to track performance
versus last year and versus the targets you’ve set for the week/month/quarter/year.

If you need help on pulling this together please get in touch. Always happy to help.

Alan Smith | 07972 310997 | alansmith@[Link] 6