The Harvard Business Review identified three major issues that were troubling business leaders worldwide in a series of 26 CEO interviews. Finding and keeping the right staff was a big challenge, especially in today’s technologically complex world. Another major concern was the effects of operating in a global market; navigating this environment and maintaining company cohesion across thousands of employees was very challenging. Another significant challenge was managing change as the company faced pressure from compliance and legislation.
As any leader will know, there’s never enough time. Maintaining a focus on your Key Performance Indicators (KPIs) can frequently be overlooked when you’re managing organizational politics, trying to guide the company toward growth, or differentiating your brand from aggressive competition. However, your KPIs should serve as the cornerstone of your enterprise and be used by all of your teams to assess their performance.
Of course, not every KPI is applicable in every business. But whether they’re in a meeting, on a plane, or just sipping their morning coffee, every CEO will want instant access to a few key metrics. Having these available on your mobile device or tablet makes it easier to stay focused on the objectives you’ve set for your business.
What You Will See in a CEO’s KPIs Dashboard (5 MAIN Point)
Why are CEO KPIs important?
Setting and monitoring CEO KPIs is crucial for a number of reasons, including:
What are CEO KPIs?
CEO KPIs are metrics that organizations can use to assess a CEO’s performance. Their key performance indicators (KPIs) are frequently numbers that other employees in the company can monitor in graphs or spreadsheets to determine whether they meet or exceed the benchmarks they set. They frequently hold the highest executive positions within an organization, so many of these relate to overall business performance.
8 Possible CEO KPIs
You may choose different KPIs depending on your organization, objectives, and industry. For instance, technology firms may monitor key performance indicators (KPIs) related to system development and bug resolution times, while a retail firm may monitor time to market. Here are some CEO KPIs that you might take into account for various businesses:
1. Revenue growth
Revenue growth means your earnings are increasing over time. To calculate revenue growth, you can use this formula:
Revenue from the prior period divided by (Revenue for the current period – Revenue from the prior period) multiplied by 100
Board members, investors, and other stakeholders can see from revenue growth that the CEO can continually increase overall revenue earnings. Companies can set revenue growth goals and evaluate them for each pay period to track the performance of their CEOs.
2. Profit margin
Organizations frequently seek to gauge profit margins in addition to revenue earnings. Increasing overall revenue or cutting costs could be ways for CEOs to increase profit margins. To calculate profit margin, you can use this formula:
Gross profit margin is equal to the product of revenue and the cost of goods sold.
Companies may also decide to track operating profit margin (the ratio of operating income to net sales) or net profit margin (how much net profit a company makes relative to total revenue). When a company’s CEO invests or saves its profits, it can help strengthen the business. This is evidenced by a high profit margin.
3. Net promoter score
The likelihood that someone will recommend your business or company to others is measured by your net promoter score. Because CEOs are in charge of a company’s overall reputation and have the ability to inform the board of directors of how customers feel about their business decisions, this is crucial for CEOs. On a scale of 1 to 10, net promoter surveys ask customers how likely they are to review a company. Detractors rate a company from 0 to 6, passives from 7 to 8, and promoters from 9 to 10. To calculate NPS, use this formula:
Participants’ promoter/detractor ratio is expressed as a percentage.
This assesses a business’s and its CEO’s capacity to develop and sustain customer loyalty and business growth.
4. Customer satisfaction
You might choose to measure customer satisfaction percentage similarly to the net promoter score. Although this is sometimes subjective, it can help you understand how satisfied customers are with their interactions with the business, its products, or its services. To ensure you collect data that is consistent, you might design a sliding scale from 1 to 10 with a number of questions for customers to answer simultaneously, such as at the checkout. Consider setting a percentage benchmark for your KPIs. For instance, you might want 95% of survey respondents to rate their overall satisfaction as a 9 or 10.
It’s crucial to monitor change in this context in order to demonstrate gains in client satisfaction. Tracking the change in satisfaction can demonstrate that any changes you made improve the satisfaction of any areas where customers gave you lower ratings.
5. Employee satisfaction
Employee satisfaction measures how content employees are working for a company and its culture, procedures, and leadership. Monitoring KPIs can help the CEO determine areas for improvement and success, such as the proportion of satisfied employees. Companies can motivate their staff and increase performance and sales by increasing employee satisfaction.
6. Spending
Companies can learn how much it costs to produce and sell goods and services by keeping track of their spending. Tracking the ratio of spending to total income can help you determine whether you are making more money than you are spending. You may also measure the discrepancy between the budget and actual spending, depending on the company budget. Monitoring spending KPIs can reveal a CEO’s spending patterns and areas for improvement.
7. System quality
Measuring system quality, particularly in technology organizations, can demonstrate to board members how committed a CEO is to providing staff with the required technology. You could include a sliding scale for this in an employee satisfaction survey or ask technology teams to monitor the frequency of defects, the interval between defects, and the length of time between defects. With the Chief Technology Officer (CTO), consider establishing benchmarks to make sure the acceptable level of flaws or time contributes to improving business performance.
8. Return on investments
The amount of profit realized after making wise financial decisions is known as return on investments. You can calculate this percentage using this formula:
(Investment’s current value minus the cost of the investment) / (investment’s cost by 100)
Following this can demonstrate to board members and investors the ability of the CEO to make wise decisions as they frequently decide what systems, partnerships, tools, and people they might invest in to improve business performance. Return on investments can fluctuate over time, so it’s critical to monitor how the investment’s value changes to produce accurate figures.
FAQ
What are the 5 key performance indicators?
- Revenue growth.
- Revenue per client.
- Profit margin.
- Client retention rate.
- Customer satisfaction.
What are the 7 key performance indicators?
- Unique Website Visitors.
- Cost Per Lead.
- Form Conversion Rate.
- MQLs Generated.
- Marketing Generated SQLs.
- Cost Per SQL.
- Closing Rate.
- Customer Retention.
What are the KPIs of a COO?
- Engagement. How happy and engaged is the employee? …
- Energy. …
- Influence. …
- Quality. …
- People skills. …
- Technical ability. …
- Results.
