What role should finance play in developing company-wide KPIs? And what makes a KPI truly effective for growing companies?

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I would like to talk about finance’s role in contributing to the development of company-wide key performance indicators (KPIs).  I believe finance is in a great position to do so because of its responsibility and expertise in financial reporting. In developing KPIs, not only should these indicators be able to link back to the company’s bottom line, they must also be able to represent the company holistically whether financial or non-financial in nature. This means that the company should be able to gather data for a single outcome that corresponds to each KPI.  For example, if the company’s KPI is revenue percentage growth, the actual figure for reporting should be a single percentage growth figure for the company-wide revenue, and not a range of outcomes based on the sales across various product or service lines. The KPI must also be easily comparable to competitors, even if the competitors do not have exactly the same KPI as the company does.

If you’re a growing company, it is highly recommended that you seek finance’s input in developing and revisiting company-wide KPIs.  After all, KPIs may change as the business grows.

Have questions on developing company-wide KPIs? Contact VMC.

VMC's views are general insights—not one-size-fits-all advice. Every company's situation is unique.