Discover How to Use ISO Metrics to Measure Business Success

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Discover How to Use ISO Metrics to Measure Business Success

ISO metrics make your objectives quantitative. When we start setting these objectives, we measure and show quantitative results to gain consumer confidence and invite more business. But how do ISO metrics fundamentally benefit a business?

As the somewhat controversial quote by Peter Drucker goes, “What gets measured gets done.”  While strictly true, it would be better to see this from a different perspective. By measuring specific metrics, the business is informed of what needs to be done. When we set KPIs (Key Performance Indicators), we have a yardstick to see where we are and where we want to be. We can then rely on quantitative measuring to figure out where the gap is between what we want and what we have.

Key Performance Indicator (KPI) Definition

A Key Performance Indicator is a value that can be measured to gauge the performance of a particular action or set of actions. Organizations use KPIs to determine how successful they are in different areas. There are several thousand KPIs that businesses may focus on. High-level KPIs are often those that pertain to the big picture performance of the business, and low-level KPIs commonly measure the particular moving parts of the company, such as:

Business Financial KPIs 

  1. Profit
  2. Cost
  3. Revenue
  4. Cost Of Goods Sold
  5. Accounts Receivables
  6. Sales
  7. Expenses Vs. Budget

Customer Metrics

  1. Customer Lifetime Value (CLV)
  2. Customer Acquisition Cost (CAC)
  3. Customer Satisfaction & Retention
  4. Net Promoter Score (NPS)
  5. Number Of Customers

Process Metrics

  1. Customer Support Tickets
  2. Percentage Of Product Returns
  3. Efficiency Measure

Personnel ISO Metrics

  1. Employee Turnover Rate (ETR)
  2. Percentage Of Response To Open Positions
  3. Employee Satisfaction

What needs to be measured should be decided from the following criteria:

1) How does measuring this objective add value to the business over the long term?

2) How critical is it for the company?

3) Does it make sense to measure this KPI to help with customers?

4) Does the KPI reflect the measurement’s objective?

5) How difficult would it be to obtain the measurement values?

Just because an objective is difficult to measure does not mean it’s not worth measuring. KPIs should be considered from their value proposition, not from their difficulty in obtaining results.

Management and supervisors have to be patient to explain the need, criteria, and impact of the measurements to each person responsible for data collection. Often this stage is not taken into account as part of Quality Management System training. Beneficial information can rise to the surface when brainstorming ISO metrics. The onus is on management to discuss and determine what to measure and how it may impact the company’s short- and long-term goals.

Determining relevant KPIs, how to compare them, learning to interpret the data, and how they relate to each other and what weight to give the data is all part of the process. Mastering data-driven results take time and some trial and error.  KPIs for one business might not be the best KPIs for a different company.

It is essential, therefore, to establish which KPIs are standard in your industry. Once you achieve that, you can determine your goals and incorporate the measurements in each area of your business. KPIs need to fit with your unique strategies and goals to give you the best results.

Any KPI is only as valuable as how you use the information. Many businesses adopt industry-standard KPIs or use what another company is using. This implementation stems from a misunderstanding of how KPIs are to be used. Instead, look at what value a KPI can bring to your business before attempting to capture it.

The best KPIs are how your business talks to you. You should understand why you are collecting the data and what it means. If you don’t interpret the data correctly, you cannot reach definite conclusions or make sound decisions. Your data should be clear and easy to understand.

When developing a strategy for creating your ISO metrics, let your team know the objectives, how the data will help, who can respond or act on the information, and what course of action will be taken. In time, you will know which business processes to measure and how to use the information.

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