How to measure the success of your strategic plan
After you’ve put in the hard work of creating a strategic plan, make sure it stays on track by using metrics to check its progress.
According to a BDC study of more than 1,100 small and medium-sized businesses, measuring progress is a hallmark of successful companies. The fastest growing businesses were about 50% more likely than other companies to use three or more performance measurement metrics.
Choose metrics carefully
The action plan you develop to support your business strategy should list the metrics you will track. These can be divided into milestones (the completion of a task or project by a certain date) and quantifiable performance measures (such as revenue and profit growth, for example).
The choice of milestones is unique to each business. Milestones can be such tasks as the launch of a website, purchasing a piece of equipment or a vehicle, hiring key staff or obtaining a business loan.
For performance measures (often known as key performance indicators or KPIs), there are many options. Choosing the right ones to follow can be difficult, but it’s important to decide carefully because these metrics will be the focus of effort in your company. Here are some tips on selecting and using these measures.
Tie to strategic objectives
Some metrics will be financial, such as profit, revenue and cash flow. You may also decide to track metrics related to marketing and/or sales goals (e.g., conversions, repeat business), operational efficiency (e.g., value creation index), safety (e.g., hours lost to injury) and environmental impact (e.g. energy use).
Your metrics should be clearly tied to your strategic objectives and move your employees toward the actions you want.
Keep it simple
Don’t overload staff with too many KPIs to track. Choose no more than four per department. It’s also important to train your team on how to track the metrics. Without training, the data may not be updated or monitored correctly, which could in turn jeopardize the implementation of your strategic plan.
Maintain up-to-date data
Be sure your measures include the latest data and are reported promptly within your company. This is the key to making them a source of feedback on your efforts and an early warning system for problems.
Use dashboards
Performance dashboards are an excellent tool for tracking your KPIs.
You can also periodically report progress to your team and stakeholders in a newsletter or strategic plan implementation report. Be sure to present data clearly using easy-t0-understand visuals.
You should also review your metrics more thoroughly at follow-up meetings held to discuss the implementation of your strategic plan. At these meetings, you can also review your choice of measures to make sure they provide useful information and stimulate the best results.