Balanced Scorecard for business is what the car instrument panel for a driver. However, instead of telling how fast you are going and how much fuel you have, the Scorecard will show you how well you are operating today and what can happen with your company tomorrow. Properly designed business evaluation framework gives an accurate picture of your business’s health and predicts possible difficulties and gives warning signs. In this article we are going to touch upon the importance of selecting proper Key Performance Indicators on example of real estate business.
Tips on Selecting Proper Metrics
It is not a secret that the indicators are the core of the entire framework. When a person designs a strategy evaluation framework he or she can either take a ready set of measures or make up own list of KPIs. Sure, using readymade templates is an easy, time- and effort-saving option, yet it is not always effective. Each business unit is a distinct entity that has it own unique internal processes that should be presented in the business strategy evaluation system. Of course, to save some time an executive may also take a readymade template and adjust it according to the specifics of his/her company. It is important to realize that identifying KPIs is a rather responsible task, and for this reason many executives simply hire experts to do this task. However, in case you have decided to create the scorecard yourself, take into consideration the following suggestions:
- The number of indicators should not exceed standards. Too much metrics clutter the evaluation system, and distract workers (when it comes to data mining).
- The indicators should be quantifiable measures. In case you need to use seemingly intangible indicators, you need to find a way to turn them into figures.
- When you pick measures, simultaneously consider different ways to gather data (questionnaires, application forms, calls, reports, etc.).
- Involve as many workers as possible.
Creating a business strategy evaluation framework may seem like a complicated task with a lot of aspects to track, but once you have made a system for it, you will get the holistic picture of your organization very soon.
Examples of Real Estate Performance Indicators
Because different real estate businesses may specialize in different spheres, you will find the most various sets of measures developed for this particular industry. So, let’s give a few examples of the most common real estate KPIs:
- Construction hours: actual hours versus planned hours.
- Defects remediation after construction.
- Average time needed to relet empty dwellings.
- Average time needed to sell property.
- Late rent payments (measured in percents).
- Percentage of houses in inappropriate condition.
- Percentage of purchase/rent cancellations.
When setting up metrics for your evaluation framework it is essential to encompass all the parts of your business that can be monitored, including independent customer ratings, monthly client referrals, etc. With properly identified indicators and wisely implemented Scorecard you will get a sense of control and confidence regarding the future of your firm.