Key Performance Indicators (KPIs) can tell you a lot about your business. So can your basic financial information such as your cash flow statement. Your company’s financial data can not only give you a snapshot of the company’s current standing, but it can help to make better business decisions. This concept goes beyond the CFO, CEO, and other members of the senior management staff. Getting the entire team involved with tracking KPIs and other financial information allows the entire company to keep the organization’s goals in mind, which in turn can really improve business.
The Logic Behind KPIs
In many businesses, duties are separated among staff members, with very little overlap. Sales and Marketing deal with attracting new customers. Product and Service teams are responsible for designing and delivering what you sell. And back-office functions like Finance, HR and IT all have their own operations and workflows. Although it makes sense that employees are trained in specific areas, your entire team should be in on the financial growth of the company. Even though marketing people may never touch a balance sheet and customer service representatives probably won’t make any major investment decisions, having a working knowledge of the company’s growth and a sense of where the company wants to go is good for business all around.
Granted when a team meeting is called, a lot of information glazes over employees at different times because they don’t feel that it affects them. Providing the background of the company’s KPIs as well as the reasoning for specific decisions not only gives your team insight as to the current state of the company, but it allows them to make better decisions within their respective departments. If the team understands that the key performance indicators you are focusing on this quarter are due to a change in financial status rather than just a random decision made by upper management, they’ll be more likely to pay attention and be engaged with the growth of the company.
Better Understanding = Better Performance
This doesn’t mean that your company should give the entire staff a crash course in Finance 101. Too much technical financial information is enough to turn any employee “off.” Instead, companies should share KPIs and financial information in relation to how it affects the employees and how each employee’s performance has an effect on the health of a business to encourage team involvement with the company’s financial goals.
If the sales people, marketing department, and human resource representatives all know how their individual functions affect the progress of the company as a whole, they will be more likely to make smarter decisions or reassess their current processes to see how they can better benefit the business. Understanding what the financial implications are of their unique positions within the company also helps to create a more cohesive team of employees.
When the whole team understands what is going on, performance improves. Having an active engagement in the organization (rather than just treating the job as “just a paycheck” can help to reduce turnover while improving employee motivation and employment.
