Rose Report: Issue 8

Taking a Cue from March Madness: RPI vs. KPI

issue08-pic-story4The holiday season has passed. Valentine’s Day is long gone. But for college sports lovers, the biggest event of the year has just begun: March Madness. Brackets have been filled out, office pools have been collected, and coworkers across the country are going head-to-head for the ultimate bragging rights.

But March Madness doesn’t only have to be a hot topic around the workplace for a single month. Companies can take a cue from the basketball tournament all year long. Just as the NCAA selection committee uses specific criteria to decide which teams get tickets to the Big Dance and how each of them is ranked, businesses should keep close watch on their own key performance indicators throughout the year to ensure they meet their long-term objectives.

When figuring out which schools to invite to the tournament and how they should be seeded, the selection committee assesses data such as the number of victories a team has on the road and against ranked opponents, conference records, and rankings in national polls. Similarly, companies can use pieces of quantifiable data to determine if they’re on the path to victory.

Key performance indicators (KPIs) vary across organizations, depending upon their individual goals and definitions of success. Common KPIs include gross revenue, number of full-time equivalent employees, profits, gross margins, and the number of leads and prospective projects in the pipeline. KPIs can also be unique to an organization. A telemarketing business likely keeps track of the number of calls that result in sales each month as a KPI. A university obviously keeps close tabs on its graduation rate. A nonprofit might keep track of how many people it has helped in a given time period.

Of course, just because an organization’s KPIs point to success doesn’t mean there won’t be an upset. Just ask Virginia Commonwealth University, an 11th seed in the 2011 tourney that beat number one seed, Kansas. Or ask Butler, the little school from Indiana that made it to the championship game against the odds two years in a row. Better yet, ask 15th seed Lehigh, which pulled off one of the biggest upsets in history when it won against second-seed Duke last year.

There are sure to be some surprises this March Madness, too, just as there are sure to be some unexpected bumps along the road for any company. Here’s hoping you filled out your brackets wisely!