Managing Performance in the Mid Market
A recent report by the Aberdeen Research Group examined what top performing mid-market companies are doing differently. Their focus was on performance management. Top performing companies achieve:
- 89% forecast-to-plan ratio
- 93% customer satisfaction rate
- 35% yoy revenue increase
Steps to success
Aberdeen found that the top performing organizations had well developed practices around performance management. Laggards were missing out on a few key points. Aberdeen’s findings indicate that organizations should:
- Develop meaningful definitions for Key Performance Indicators to drive achievement, and provide a central location for them to be shared.
- Work with both high-level and low-level KPI. It’s an important part of performance culture, and the lower levels will roll up to the high-level KPI.
- Establish a role-based incentive program tied to performance achievement, measured by KPI.
The full report is available on Aberdeen’s website (registration required). Obviously this all means that KPI should be a focus.
Defining KPI
KPI should be tied to strategic objectives, but they should not be handed down from on high already set in stone. Teams should work with managers and executives to define KPI, and they should follow a process of constant refinement. I think it’s important to distinguish between leading and lagging indicators as well.
For instance – I was once part of an initiative to reduce the length of our sales cycle through marketing. We had information on ‘time in pipe’ and on ‘time to close’ to measure our success. ‘Time in pipe’ would be considered a lagging indicator – nothing that we do today will affect how long something has been in the sales pipeline already. If we only track this, we have to wait for a year (or some multiple of the average sales cycle length) to find out if our efforts have had success, and we will have a very accurate picture. Time to close, on the other hand, is a leading indicator. If we do something really well, then ideally, sales representatives will begin to reduce the estimated time it takes to close a sale. It is predictive of the length of sales cycle, and therefore not 100% accurate.
Both leading and lagging indicators have their merits, so teams, managers and executives should consider their KPI definition carefully.
-IainR
Sr. Marketing Manager – The BI Builders
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