Last blog we discussed the importance of meetings fitting together. Your meetings should cascade or telescope from the first meeting of the year which should be your annual planning meeting. This should be about 2 – 3 days depending upon what you need to discuss, how complex the challenges are that the organizations faces, and when you last did a proper planning and strategy session.
Strategic Discipline Blog
A question that frequently comes up is what should I have Key Performance Indicators for in my business? Certainly there are lot of options. Revenue and profit margin are Key Performance Indicators that everyone should monitor, however these are lagging indicators. What Key Performance Indicators do you have in place that predict your revenue and profit margin? Do you monitor your sales effort and have indicators that report on your sales pipeline? How reliable are these? Do you monitor your variable costs and fixed expenses? Contribution margin is a good forecaster of profit margin as well as gross profit margin. Yet do these give you enough information far ahead of your performance to be true leading indicators? With time and practice whatever number you choose to watch you can discover which key metrics help predict the crucial outcomes in your business.
As we approach 2011 and put 2010 in the review mirror it’s important to understand that there are two types of key performance indicators in your business: leading and lagging.