Key performance indicators

Key performance indicators – how to choose them

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Setting goals, measuring and following up on how a company is doing is crucial to its success. It is important that both the board and management have good transparency and follow-up so that measures can be quickly appointed if the development does not go according to plan. With the right key figures, it is easy to follow how your company is doing and to compare it with other companies.

In this article, we give you tips on how to develop important key figures for your company.

Having good reporting can be the difference between bankruptcy and success. If you do not have an eye on eg. liquidity, equity, cash flow, the company can quickly end up insolvent or in the control balance sheet.

Easy management in Boardeaser

With Boardeaser, it is easy to visualize your data. Boardeaser creates a variety of important key figures automatically via loading data from the financial system and operational key figures can be loaded from excel. This means that you can create and follow up your important key figures with a few clicks of a button.

3 tips for choosing key performance indicators

1. Develop key figures that are relevant

Key figures are only relevant in relation to something. Start from the goals and strategies adopted by the Board and measure how the business performs in relation to these. Here’s what a plan from vision to action might look like:

  • Vision – What/where do we want to be in the future?
  • Strategy – How do we get there?
  • Goals – What goals must be met?
  • Critical factors – What factors are required for the goals to be achieved?
  • Key figures – How do we measure how things are going?
  • Initiative – What does the action plan look like?

When the value-creating chain above is connected, it is easier to produce relevant reporting that ultimately leads to the right measures being taken. It is common for a board to focus only on financial key figures, but if, for example, a strategy for increased customer satisfaction has been adopted, this should be measured, so that the strategy can be followed up. Start from the question “What data is key?” when something should be measured to more easily weed out irrelevant data.

One risk of looking at competitors’ KPIs is precisely that each business makes its own journey and adopts its own goals. If you start measuring the same things that competitors do, it is easy to lose focus from your own strategies and get lost.

Examples of key figures

The Board of Directors of Examplebolaget AB developed a strategy to improve liquidity in the company. Three KPIs were selected to evaluate the strategy:

  • Liquidity
  • Length of customer invoices
  • Cash flow analysis

With Boardeaser’s addition Financials, the Board automatically sees graphs of the above key figures when loading accounting data:

Liquidity, monthly
nyckeltal-likviditet
Cash flow
nyckeltal-kassaflöde

Key figures and reporting – here's how to think

2. Choose key figures according to who the recipient is

To the Board of Directors and Management

In a large organization, not all data needs to be communicated to everyone. The board and management only need to see key figures that say something in relation to the board’s responsibility and strategic decisions. This reporting should be summed up with few but carefully selected and important key figures. Comments on these metrics are very important.

For different departments

Reporting within departments further down the organization can be more detailed and specific. They will also measure set goals and action plans for each department.

External communication

External communication to, for example, shareholders and the financial market may also include KPIs in reporting. By communicating the same key figures externally as to the board and management, the outside world understands what is important to management, and how well adopted strategies go. In external reporting, however, it is even more important to weave together the key figures with a story about the business.

Examples of operational key figures

The sales manager in Exempelbolaget AB wants to follow KPIs linked to ongoing change work. In Boardeaser, graphs from operational key figures can be entered with Boardeaser KPI Analytics.

The sample company created an internal report template in Boardeaser with the following key ratio graphs, which includes rolling averages for 3 and 12 months:

Per-user support ticket
nyckeltal-supportärenden
Churn
diagram som visar churn

3. Should go and interpret and be easily accessible

The key figures must be both easily accessible to produce and interpret. When setting a reporting routine, it is easy to take too broad a perspective with too many metrics and KPIs from different parts of the business, which means that the reporting becomes too cumbersome and does not get started at all.

Better then to choose the lowest hanging fruits and start from them, which KPIs are most important and easiest to get right now? Think ROI, if the cost of producing a key figure exceeds the possible profit from a change thanks to the key figure, it is not profitable.

How to easily create reports in Boardeaser that are based on your important key figures

In Boardeaser, your KPIs can be visualized with three of our tools:

  • Boardeaser Financials – Financial key figures directly from accounting and budget
  • Boardeaser KPI Analytics – Create your own key ratio graphs
  • Boardeaser Reports – Write CEO reports to the Board with the above key figures

With Financials, you get a financial overview where you can see how the business is developing in a few minutes. You can tailor the overview with the key figures you are interested in.

Supplement with your own operational KPIs from the business. Both types of key figures can be entered in reports and in the financial overview.

It’s easy to get started – as soon as new data is uploaded, graphs and tables are automatically updated.

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