Peter Drucker once said, “If you can’t measure it, you can’t manage it.”
Key Performance Indicators (KPi’s) are often associated with financial measures, but Non-Financial Key Performance Indicators (NFKPi’s) are equally important and should be identified and measured to allow the performance of an organisation to be viewed as a whole.
What are NFKPi’s?
Some examples of non-financial KPIs that can be measured are:
- Customer satisfaction: How satisfied the customers are with the quality of service or products provided by the company.
- Employee engagement: Identifying the level of commitment and enthusiasm that employees have towards their work and the company.
- Quality control: Ensuring the level of accuracy and consistency in the production process, which can impact product quality and customer satisfaction.
- Innovation and creativity: What are the abilities of the company to develop new ideas and solutions that can improve their products, services or processes.
- Time to market: How long does it take a company to bring a new product or service to the market.
- Environmental sustainability: What are the company’s efforts to reduce its environmental impact, such as reducing waste, carbon emissions or water usage.
- Social responsibility: Monitoring the company’s commitment to ethical and social issues, such as human rights, diversity and inclusion, and community involvement.
So, this is what NFKPi’s can be used for but why are they important?
Financial metrics alone may not provide a complete picture of the company’s performance.
Non-financial areas of the business such as those above, can have a direct impact on the company’s financial performance. For example, sales will be lost if the customers are not happy with the product or service as they will go elsewhere; employees will end up costing the company money if their output is low because they are not engaged; or you may lose a section of the market share if you cannot keep up with the competition.
It is therefore important to track the non-financial KPI’s as well. It allows insights into other important aspects of the business and can identify areas that need improvement and those where the company is excelling.
Identifying non-financial KPI’s can also help to reinforce a company’s values and goals. For example, if a company values sustainability, they may track KPIs related to reducing waste or carbon emissions. By measuring these factors, a company can ensure that their actions align with their values and goals.
By using KPIs to guide strategic decision-making, companies can make data-driven decisions that lead to better outcomes.
