I believe that one of the most important roles for the CEO of a small company is that of “scorekeeper”. You are responsible for making sure score is being kept in your business and that those key numbers are being communicated to the right people.
How do we know which numbers to keep track of?
“Key Performance Indicators For Dummies”, written by Bernard Marr, is one of the best and most exhaustive resources on tracking KPIs that I have found. The author, Bernard Marr, is the founder and CEO of the Advanced Performance Institute. In the book, Marr introduces the reader to KPIs in the following areas of the business: financial (the most common), marketing, operations, and HR. There are hundreds of examples of indicators identified in the book and helpful explanations for each one.
Here are several of my favorite KPIs identified in the book:
- Cash Conversion Cycle: How long does it take to convert cash within your business?
- ROCE: Return on Capital Employed: What return are we getting on the debt/equity that has been employed within the company?
- Net Promoter Score: Best measurement of customer loyalty.
- Revenue per Employee: How productive is your work force?
I found this book to be a difficult read due to the exhaustive nature of it. However, it will be a great resource for my clients and me.