Critical success factors are strategically established indicators that measure the progress of an organization toward strategic goal achievement. These measures are used to help the organization stay focused on business goals that are part of a strategic plan and an integrated performance management system.
Critical success factors vary greatly from industry to industry and should be based on outcomes that measure the success of the organization. These high level measures are used to monitor business stability, growth and development. They are part of a corporate level tracking system that monitors the health of an organization.
Some sample critical success factors (CSF):
- Revenue targets – increase revenue by 10% within two years.
- Donor goals – increase donor partners by 25% within four years.
- Sales volumes – increase sales by 15% within twelve months
- Customer Satisfaction – increase customer satisfaction from a 78 to an 85 approval rating within two years.
- Customer Growth – increase customer base by 25% within five years.
- Employee Satisfaction – increase employee satisfaction from a 64 to an 83 approval rating within eighteen months.
- Employee Retention – increase employee retention from 68% to 79% within three years.
- Product Quality – decrease product defects by 23% within eighteen months.
- Increase regional market share by 5% within two years.
Once CSF are identified, they should be incorporated into business goals that are translated into departmental goals and ultimately employee goals.
Critical success factors should be monitored as part of a performance management process and incorporated into the performance appraisal process. When critical success factors are written as SMART goals, they help keep the performance appraisal process fair and objective, which minimizes manager rater biases when evaluating employee performance.
All organizations should identify between five and ten critical success factors, incorporate them into their strategic planning process and use them as a management tool to ensure the organization is progressing toward achieving its strategic objectives.
photo by: PaDumBumPsh