Did you know that the annual high performer turnover rate on average is 3%? Or that for a 100-person company that provides an average salary of $50,000, turnover and replacement costs could be as high as $2.6 million a year?
Using non-financial KPIs to your advantage is crucial to achieving corporate success since they provide the additional measures required to execute your strategic initiatives and produce strong growth by overcoming challenges and adding the kind of value to your business operation that offers the potential to better set you apart from your competitors. Therefore it is important to understand which ones you would like to focus on and how each non-financial KPI links to your business plan.
Financial KPIs are usually related directly to income statement or balance sheet components and include analytical reports on sales growth and expense categories. Non-financial KPIs are all the other components that an organization sees as important to the achievement of its business plan.
Typical non-financial KPIs include measures that relate to customer relationships, employees, operations, quality, cycle-time, and the organization’s supply chain or its pipeline. Some prefer to use the term ‘extra-financial’ rather than non-financial, suggesting that all measures that contribute to organizational success are ultimately financial. In addition to financial and non-financial, other common categorizations of performance indicators are quantitative versus qualitative; leading or lagging; near-term or long-term; input, output or process indicators, etc.
#1 - Employee Know-How and the Internal Value of an Assembled Workforce
Achieving corporate success is not possible without successful onboarding and retention of employees. An assembled workforce is an element of goodwill that represents the value of having a fully trained employee base. Its value is representative of the avoided cost that would be required to recruit and fully train the company’s employees, including the lost productivity that would occur during the period of time that it would take for the new employees to become 100% productive.
The employee "know-how", a significant component in a company's intellectual capital, is the skills & competencies, expertise & prowess, and knowledge & experience residing within the heads of employees.
Recent developments around the world have greatly impacted companies' ability to recruit and retain talent, but there's still a lot that can be done that isn't currently happening in many organizations. For example, one of the biggest reasons employees leave is a lack of growth and development opportunities. According to a recent publication, 22% percent of workers leave for career development, a number that has increased by 170% in the last decade. The type of work, a lack of opportunity for growth and little opportunity for advancement are all issues that fall under career development.
Another important issue affecting employee churn rates is employee engagement. In companies with over 40% annual turnover, that maintain higher engagement levels, the turnover is 18% lower. Moreover, companies with less than 40% annual turnover experience 43% less turnover with higher levels of engagement.
Measuring non-financial employee-related metrics can be both quantitative and qualitative. For example, conducting an annual talent survey where you can offer employees the chance to express their opinions anonymously, or calculating the churn rate of high performers and performing exit interviews to get a clearer understanding of why these employees left.
Customer experience is the subjective response customers have to direct or indirect contact with a company. It encompasses every aspect of an offering: customer care, advertising, packaging, features, ease of use, and reliability. Customer experience is shaped by customers’ expectations, which largely reflect previous experiences. Few CEOs would argue against the significance of customer experience or against measuring and analyzing it. But many don’t appreciate how those activities differ from CRM or just how illuminating the data can be.
To measure customer experience, you need to identify all of the major touch points on your customer's journey map. Once you've identified the touch points, it is important to establish key criteria for what constitutes a positive versus a negative experience. Examples of customer touch points include:
Before Purchase | During Purchase | After Purchase |
|---|---|---|
Advertising | Website | Support Team |
Review Websites | Sales Team | Marketing Emails |
Social Media | Point of Sale | Billing |
Word of Mouth | Store or Office | Follow Ups |
Some companies base their entire sales strategy on their reputation. It not only contributes to the bottom line by increasing sales, but it also improves your chances of attracting and retaining the best talent available in your industry. A positive brand reputation—on and offline—means that customers not only trust your business but are likely to purchase your product or service. The key to a winning brand reputation strategy is recognizing that you don't have to wait for people to form their own opinions about your brand. Instead, by building your brand’s experiences around your target customers’ needs, wants, values, and opinions, you can help shape how they perceive your company.
If you're just starting out and you're not there yet, don't worry. There are several important contributors to brand reputation that you can start implementing straight away. Good examples of maintaining a positive brand reputation include: learning and growing from feedback, staying active on social media, writing high-quality content, and telling your story on your website and on other marketing channels.
It all starts with figuring out the values that matter to you most, as the company's leader, and maintaining them throughout any business transaction or interaction that you conduct. Once you do that regularly and make sure your employees do the same, you will be well on your way to achieving a positive brand reputation.
It all Comes down to Focusing Your Efforts in the Right Direction
Once you decide on the non-financial KPIs that matter most to your company, you will be on the right track to achieving both your financial and non-financial goals.
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