Strategy defines the purpose of an organization's existence. This in turn dictates the framing of lower-level goals and objectives of the business house. Consequently, the task should be done with utmost care as any compromise, be it at the formulation or monitoring stage can cause substantial damage to the company.
A quantitative step if put in place can take the burden off the shoulders of the organizational management. Indicators called KPIs (Key Performance Indicators) can be used to do just that. With the target values assigned to these measures after a thorough study of the macro and microenvironment, one can assured of the direction the organization is heading in.
These indicators will have to be developed in different directions and these may include perspectives like Financial standing, Customers, Internal Processes and Education and Growth should be framed. Financial Perspective can gauged from parameters such as return on Assets, Equity, Management and Time taken for Decision making. Customer gain ratio, Customer Satisfaction Index, Brand index and Average Customer base are the one to obtain Customer perspective. Internal Processes Perspective can be obtained with Rework Time, Cost Incurred as Administrative error and Rate of Productivity. Education and Growth can be had from Satisfaction Index of Employees, Number of Assignments on Cross- functional basis and Total training hours.
To start with, a well-defined strategy is the initial challenge that needs to be overcome by the organizational management. Also, the strategy should be sensitive enough to reflect the changes that keep occurring in the milieu it functions in. Further, communicating it in the right perspective poses another hurdle. Moreover, often financial indicators are found to eclipse the role of non-financial counterpart. So while deciding for the measures, both the financial and non-financial aspects are to be taken care of. Yet another addition to the list can be filtering the relevant indicators from the crowd available. This should be done in a careful manner as setting of wrong measures can mislead the group.
KPIs in this context prevent the organization from drifting away from the eventual aims they strive to achieve. They impart a focused approach to organizational people and processes. With suitable indicators on a Balanced Scorecard to keep a check on whether the organizational strategy confirms to the aims, there are minimal chances of missing the target. Once the method to control strategy has been established, the group experiences better connectivity between the long-term and short-term goals. As a result, resources would be put to use in a more prudent manner than ever. Indicator such as 'Return on Management' gives an idea of how productively management is using its time.
Ensuring that proper procedures to control the formulated strategy are in place is as significant as its formulation; which in turn is done by matching the external opportunities and threats with internal strengths and weaknesses. To say it all, though digging out these relevant, actionable, and specific measures may be a trouble-some task, but the pain is worth taking.