All systems have indicators that should tell you how well or how poorly parts of the system are working, and key indicators that focus on the most critical elements of that system.
The purpose of Key Strategic Indicators is to tell you how well various parts of your business are working and how your business is progressing towards your Strategic Objective. The objective of Key Strategic Indicators is to quantify, systematise and set objectives around the way in which you plan and measure the progress of your business – in other words, the signals that indicate your progress toward your Strategic Objective.
Measuring tangible indicators
Tangible indicators are those things you can objectively measure (e.g., commission, fees, profits, growth, assets, liabilities, business value, assets under management, client Net Promoter Score ratings). These indicators are clear and quantifiable.
A useful exercise for you may be to:
- identify a few tangible elements of your Strategic Objective
- identify your current performance and your desired results
(where you are now and where you want to be)
- establish the gap between the two (how far you have to go)
- periodically track and evaluate progress to your target (how you are progressing).
Quantifying intangible indicators
Intangible indicators are elements of your business that are critical to achieving your goals (business reputation, employee morale, fair client treatment). These cannot be measured in units, but they can be quantified.
It may also be useful to do a similar exercise with intangible indicators:
- identify a few intangible elements of your Strategic Objective
- create ‘opposite pair’ descriptions (best case/worst case) for each element
- score your current performance and state your desired performance level
- establish the gap between the current and desired performance level
- periodically track and evaluate progress to your target.