Large organizations can have thousands of employees at any given time. So, it might be impossible to keep track of each employee’s performance individually—that’s where key performance indicators (KPIs) come into play. KPIs help organizations and businesses keep track of progress from the company’s lowest ranks to the overall business performance.
To a large extent, the KPI system is a mathematical tool that can help any organization set and achieve critical objectives. Like any other tool, implementing this system plays a vital role in the final result. Let’s take a closer look at what KPIs are and why some technology companies are not fully utilizing the benefits of this fantastic tool.
What are KPIs?
Key performance indicators are performance measures quantified with time to meet specific business goals or objectives. They act as a stepping stone to achieving key tech business milestones and help everyone in an organization make better decisions. All parts of an organization can use and benefit from key performance indicators.
How To Use KPIs To Inspire Growth In Your Technology Business
1. Link KPIs to company strategy.
Tech business strategy and company KPIs are parallel concepts. KPIs deliver critical information about your business. The only way to objectively break down and analyze this information is to know what your tech business needs to achieve in a specified time gap. It is also crucial to fully comprehend the number of resources the company has access to. If company goals or objectives are not in harmony with your KPIs, you are setting up your business to fail or potentially lose money.
2. Take only what is relevant to your business.
KPI data collection systems provide management with a wide variety of information regarding employees and company operations. It may be tempting to try to correct all data even if it does not affect overall company performance. Historically, micromanagement has been a welcomed style of management in the tech industry. Hence, it is paramount that tech management only acts upon the necessary data and leaves the rest.
3. Consider the data collection method.
Each company uses different techniques to collect KPI data. There is always a chance that collected data is inaccurate or may have numeric flaws. Some IT leaders take KPI data as the gospel truth, which can result in two things—IT management may pick on employees using inaccurate data and damage relations, or the IT company can think they’re making progress while regressing in reality. For these reasons, checking and double-checking all KPI-related data and data collection methods is essential.
4. Recognize the vital role each employee plays.
It is common for companies to fail to leverage KPI data for better performance. Failing to realize how each employee contributes to company progress can result in gross underutilization of resources. This subtle disconnect can result in permanent damage to an IT company. IT leaders need to promote inclusivity and teamwork in KPI improvement strategies for wholesome results in the future.
KPI Mistakes IT Companies Make
Here are a few mistakes IT companies should avoid.
• Ignoring Or Fixating On KPI Data
Some companies will bet everything on their KPI data, while others will ignore the KPI data presented altogether. Both extremes are incredibly corrosive to IT business growth. It is essential to employ KPI growth strategies moderately and do frequent reviews. It is not hard to tell if a specific tool is working or not. More importantly, follow the progress and make fitting adjustments where necessary.
• Using Blanket KPIs
There is no “one size fits all” in the tech industry. One IT company’s KPIs will not get the job done for the next. Each IT company needs to design its unique KPIs and develop strategies to achieve its goals.
In addition, hiding KPI data from anyone within the company can lead to mistrust and a general decline in company health. Everyone should access their data to find ways to improve performance, consequently making the company money. It is vital to avoid micromanagement in the IT industry at all costs.
• Issuing Incentives Based On KPIs
Linking your company’s KPIs to employee incentives is a recipe for a toxic workplace. KPIs should not be solely applied to measuring merit for promotions or bonuses. They can be part of the criteria but are not the only measure of value. KPI data is only meant to keep track of progress toward company goals. They act like a sort of compass for everyone in the company.
• An Impartial KPI Selection Team
Everyone in an IT company should have a say in the KPIs they think work best for the company. Leaving people out, especially top management, can misrepresent company values and lead to a biased, ineffective KPI system. I am not saying that everyone should be in the room. But each department in an IT company should be represented.
The Benefits Of Working With A Nearshore Software Company
Working with a nearshore software company can be a good idea for U.S. IT companies for the following reasons.
• You get to work in similar time zones, thus improving communication.
• You will see improved efficiency due to the specialization of an external company.
• You can more effortlessly meet your KPIs.
• You will have reduced costs because you do not have to rent out local office space.
IT companies can create dynamic ways to utilize KPIs to their meaningful ends. There are various ways that well-designed KPIs can work for your IT company, but only when they are strategically designed and implemented to suit your company’s unique goals. By avoiding the mistakes mentioned above and capitalizing on the KPI benefits, you can get your IT company one step closer to realizing long-term company goals.