CRITICAL SUCCESS FACTORS AND KEY PERFORMANCE INDICATORS

CRITICAL SUCCESS FACTORS AND KEY PERFORMANCE INDICATORS

In a competitive business environment, a key success factor helps firms outperform competitors. Nevertheless, there are a lot of factors to take into account. But among these elements, not all are critical to business growth and survival.

Competitive advantage is when a firm is more successful than other competitors in the market. Such a firm has control of the market at large because consumers prefer them better than others. These can be a result of their undisputed brand image which they have built over time (goodwill), technological expertise, and exceptional customer relationship.

Although there are several ways to achieve business growth, nevertheless for this work, we shall exhaust two factors which are: Critical success factors and Key performance indicators.

CRITICAL SUCCESS FACTORS

These are activities required for ensuring the success of a business.  These are essential elements that firms must embark on to outperform competitors. They are aspects of business that are seen as vital for successful targets to be maintained and attained. Examples of such may include; Staff attitude, share price, brand awareness, product quality, customer retention, and manufacturing flexibility. (These examples may vary with the type of business in focus).

Therefore to, achieve an effective critical success factor targets are set and every act is put in place to achieve the set targets.

GUIDE TO SELECTING CRITICAL SUCCESS FACTOR

1. First, outline the firm’s set goals and objectives
2. Draw a scale of preferences from them measuring each original target.
3. Compare historic data and identify the target.
4. Close breaches if any exist.
5. Finally, to ascertain effectiveness and efficiency constantly review and measure performances in usage.

KEY PERFORMANCE INDICATORS

A Key performance indicator is an indicator for determining a critical success factor

Key success factors are quantifiable metrics that flex how well a firm is attaining its targeted objectives and goals. Its analysis how the organization is achieving its set goals and objectives through metrics. Key performance indicators are used to measure the impact of critical success factors. Examples are increased revenue generated per client, percentage of customer wait time, profit margin, number of sales per week, Rate of client retention, and customer satisfaction.

Differences between key performance indicators and critical success factors 

 Several persons may confuse key performance indicators to be same as a critical success factor

• Critical success factor is elements that are vital for a strategy to be successful while key performance indicators are measures that quantify objectives and enables the measurement of strategic performance.
• Critical success factors are set to achieve set objectives whereas key performance indicators use related matrices to determine the extent to which the set objectives are achieved.

ADVANTAGES OF KEY PERFORMANCE INDICATORS AND CRITICAL SUCCESS FACTORS

1. Help to identify improvement areas. Firms can see where there are deficiencies in meeting set targets and objectives and work toward resolving them.
2. They serve as a guide to see that set goals and objectives are achieved
3. It places preferences on the most prioritized strategic objectives of the firm. Although all strategies are vital, with the critical success factor order key objectives are identified and acted upon. Help to focus on key areas of attention.
4. Achieves higher results than other related indicators tools.
5. They help to boost profitability.

THE IMPLICATION OF KEY PERFORMANCE INDICATORS AND CRITICAL SUCCESS FACTORS

1. Ensure that chosen measures reflex customer satisfaction.
2. Ensure that they are understood clearly by all employees. There should be formal training to carry all parties that will be involved in using the key performance indicator and critical success factor to understand the implication of non-adherence.
3. Feedback should be collated improvements are made where necessary.
4. Finally regular monitoring is very crucial. These serve as performance checks.

KEY PERFORMANCE INDICATORS PROCESS

1. Firstly, Identify the problem.
2. Develop a process for how what you want to achieve.
3. Establish a benchmark.
4. Develop first its output before input, by having a view of what the result would be.
5. Most importantly, select the best fit key performance indicators, document, and share
6. Finally, as implementation is in progress, monitor the result frequently and respond to the variances identified.

KEY SUCCESS INDICATOR A TOOL FOR STAFF EVALUATION

Organizations conduct periodic evaluations of their staff. Key success indicators can also be used to appraise the performance of staff/employees. Before promotions or other kinds of appreciation are given to top-performing personnel, certain requirements must be met to acknowledge effective process delivery.

Also, when firms are downsizing due to subpar performance and cost-cutting; firms use key performance indicators to assess workers and determine which staff members should be fired as a result their services may no longer be needed.

Examples of indications for evaluating staff performance are:

• Positive feedback and recommendations from satisfied customers: when customers are satisfied they appreciate the help of the staff who made it happen, by recommending them.
• Negative feedback from customers: However when customers are unhappy with the services they receive can express their dissatisfaction through the available channels, which aids in improvement.
• Others are; Staff dressing, professionalism and ethical approaches to work (punctuality), staff overall performances, and results.

EXAMPLES OF FIRMS AND THEIR CRITICAL SUCCESS FACTOR

For firms that produce phones, critical success factor includes

1. Set selling prices to be below other phone competitors.
2. Developing phones that match with other competitors in terms of their camera quality, durability, memory, processor, securities features,
3. Availability to customers when needed.

FOR RESTAURANTS 

1. Selling affordable food for customers.
2. Selling the best quality of food.
3. Availability of requested food and timely delivery when a customer orders.

Critical success factors examples

Also, FOR CAR COMPANY

1. Producing a durable car, that speeds well and has a reliable engine.
2. Affordable prices
3. Producing best-fit cars that have the current technologies and features in place.

BANK

1. Their marketing strategies and abilities to sell products that best suit their customer’s needs.
2. Ability to satisfy the customers with the best operations network that will make them come back for more. Having a passion for customers is very important.
3. The ability to provide satisfying customer service guarantees loyal clients.
4. Having excellence in service delivery and customer retention.
5. Having a strong trademark.

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CONCLUSION

In addition, through the effective use of critical success factors firms’ resources are preserved. This is because it helps them concentrate on areas that are more critical than others.

Focusing on key areas helps firms use minimal input to achieve greater output. Hence, overall operations are executed effectively and efficiently.

Finally, Critical success factors and key performance indicators are tools to gain a competitive advantage and growth strategies.