Key Performance Indicators (\u201cKPIs)\u201d are a very important part of any\nsuccessful business. Having measures\nthat can look at performance in a specific area of your business is critical to\nknowing how well you are doing and how you compare to similar dealer operations\nin your industry. Sharing and evaluating\nKPIs in Dealer Performance Groups is a great practice that can bring\nexceptional results improvement. That said, KPIs can be very powerful tools that\ncan turn pretty ugly and hurt the business more then they help. Here is some insight on \u201cThe Good, The Bad,\n& The Ugly\u201d of KPIs:<\/p>\n\n\n\n
The Good:<\/strong> When linked to your strategy, a KPI can generate\ntremendous focus on what\u2019s important. It\nnot only acts as a report card on the execution of your strategy, but it can\nalso bring strong and healthy discussion around what that KPI means and how it\nshould be viewed. This education process\ndevelops a much stronger team with a richer understanding of the broader\ndynamics of your business. When teams\nengage in this knowledge environment, they start thinking differently about\ntheir decisions and share and engage in conversations that help the entire\nbusiness perform better.<\/p>\n\n\n\n The Bad:<\/strong> When a KPI is\nan isolated target, it can drive negative behaviour as a result of \u201cLocal\nOptimization\u201d. When an owner or senior\nteam in a business dictates KPIs and ties them to individual incentive plans,\nbehavior changes. A great example of\nthis was a Parts Manager that was given a KPI target for inventory turns. The KPI was not set with the support of the\nParts manager and it had an individual financial reward attached to it. This is when behaviour started to change. In a plan to hit the KPI, the Parts Manager\nstarted reducing inventory without thinking about how it would affect any other\narea of the business, most importantly the Service Department and Customer\nSatisfaction. This was discovered with\ndecreased turn around in the shop, many angry visits to the GM\u2019s office by\ncustomers, and the legitimate concern from the Service Manager that this\nbehaviour was negatively hurting his KPI performance.<\/p>\n\n\n\n However, we were able to fix this problem and get the results the dealer\nwas looking for. First, by bringing the team together, then selecting the KPIs\nwith the right benchmarks, and finally tying the incentives to the joint team.<\/p>\n\n\n\n The Ugly:<\/strong> When KPIs\nbecome targets that low-integrity leadership sees as a way to maximize\ncompensation, very serious behaviour changes happen. In a recent discussion with a dealer, he was\nshocked to learn that his sales manager who just left after his big bonus\npayout had left a financial train-wreck behind. \nThe owner of the business had set a Market Share Target that was tied to\na significant financial reward. Not\nbeing as close to the daily operations as he should have been, the dealer did\nnot monitor trade values on used equipment, residual risk on leases, or side\ncommitments to customers to get deals done. \nThe sales manager got the Market Share the owner was looking for, and\nhis big financial reward. But, it was not long after that the financial and\ncustomer relations damage started to surface.<\/p>\n\n\n\n KPIs are great for getting a view of your business as it relates to your\nstrategy as well as benchmarking how you are doing in the industry. However, there are some critical elements to\nremember: make sure the data you are using is good, that you have selected the\nright measures, and that your team is part of the selection process. Also,\nremember that a KPI is only a snapshot of a moment in time. To get full value from KPIs, always track\nthem over time in a graph. Knowing the direction\na certain measure is moving over time is the best way to see progress or alert\nyou to possible negative trends.<\/p>\n\n\n\n For more information on KPIs and how they can be used to optimize your business, get in touch with the author of this article, John Higgins. John is CEO at The SCP Group and can be reached at jhiggins@scpg.ca<\/a><\/p>\n\n\n\n <\/p>\n","protected":false},"excerpt":{"rendered":" Key Performance Indicators (\u201cKPIs)\u201d are a very important part of any successful business. Having measures that can look at performance in a specific area of your business is critical to knowing how well you are doing and how you compare to similar dealer operations in your industry. Sharing and evaluatingContinue Reading<\/a><\/span><\/p>\n","protected":false},"author":2,"featured_media":126,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[9,12,15,18],"tags":[43,78,79,97,127,133,141],"_links":{"self":[{"href":"https:\/\/scpg.ca\/worthreading\/wp-json\/wp\/v2\/posts\/97"}],"collection":[{"href":"https:\/\/scpg.ca\/worthreading\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/scpg.ca\/worthreading\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/scpg.ca\/worthreading\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/scpg.ca\/worthreading\/wp-json\/wp\/v2\/comments?post=97"}],"version-history":[{"count":1,"href":"https:\/\/scpg.ca\/worthreading\/wp-json\/wp\/v2\/posts\/97\/revisions"}],"predecessor-version":[{"id":318,"href":"https:\/\/scpg.ca\/worthreading\/wp-json\/wp\/v2\/posts\/97\/revisions\/318"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/scpg.ca\/worthreading\/wp-json\/wp\/v2\/media\/126"}],"wp:attachment":[{"href":"https:\/\/scpg.ca\/worthreading\/wp-json\/wp\/v2\/media?parent=97"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/scpg.ca\/worthreading\/wp-json\/wp\/v2\/categories?post=97"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/scpg.ca\/worthreading\/wp-json\/wp\/v2\/tags?post=97"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}