Data is everywhere. Some of us are using data better than others, yet there is no denying that we all have vast amounts of data at our disposal.
But remember, data is not information. Raw data must be turned into actionable information for it to have any real meaning. This is why we emphasize the importance of Key Performance Indicators (KPIs). KPIs are the quantifiable measures that a company uses to gauge its strategic progress. These key performance indicators help us turn raw data into actionable, useful pieces of information.
Are You Tracking the Right KPIs?
Clearly, key performance indicators are an important aspect of the strategic focus on data. Yet many organizations do not track the right KPIs. The “right” key performance indicators must align with their strategic and operational goals. If a credit union’s goal is to achieve deposit growth, then some aspect of deposit growth must be part of that organization’s set of key performance indicators.
You can’t manage what you don’t measure. – W. Edwards Deming
We tend to manage towards what we are measured by. If we define the proper KPIs, then managers will manage towards the goals we wish to achieve simply as a byproduct of how they are being measured. By aligning management with the proper KPIs, the organization will naturally align with strategic goals and progress towards these goals as defined by the key performance indicators.
Three Ways to Know You Are Tracking the Right KPIs
1. You have less than 10 KPIs.
The premise here is that if you have too many key performance indicators, you really don’t know what your strategic goals are (or you simply have too many). Even 10 is too many KPIs for most organizations! I typically suggest that an organization focus on 5-7 key performance indicators. Remember, there may be a large number of operational metrics that support those key performance indicators, but we only want to focus at the strategic level on the most important 5-7.
2. Your KPIs align with your strategic goals.
Really ask yourself what the strategic goals for the organization are over the next three-to-five years. Once you have those goals written down and agreed upon, ask yourself “do our key performance indicators truly measure our progress towards the strategic goals?”.
If the key performance indicators do not directly support the strategic objectives of your organization, then the current measures simply are not the correct KPIs.
Repeating Demings’ quote, “You can’t manage what you don’t measure”. By defining key performance indicators that measure progress towards strategic goals, we enable our teams to manage towards our strategic goals.
3. Your KPIs aren’t the same as everyone else’s KPIs.
Key performance indicators are (and should be) unique to your specific business. In the financial industry, we tend to emphasize peer comparisons and benchmarking. This is a valuable exercise and has its merits, but your key performance indicators should not be about benchmarking or about matching up with what others are measuring. KPIs should be specific to your business and your business alone. Obviously, there will be overlap where financial institutions have some of the same key performance indicators. However, do not track a KPI simply because “Credit Union ABC” tracks that measure. What might be a good KPI for “Credit Union ABC” may not fit the strategic goals for “Credit Union XYZ”.
Need help figuring out what KPIs you should be tracking? Fill out the form below, and we will be in contact shortly!
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