How to boost productivity with KPIs

Productivity is often the differentiator between success and stagnation

Do more with less. SME owners know that pressure well, with productivity being the differentiator between success and stagnation. Over the past five years, Britain has suffered an ‘almost unprecedented’ plunge in productivity, according to a recent report by the Resolution Foundation think tank.

But how can SME leaders unlock the productivity in their enterprises? One of the most powerful tools for driving productivity is the effective use of key performance indicators (KPIs). When thoughtfully designed and transparently applied, the right KPIs can help small businesses focus their efforts, engage their teams, and achieve better results.

Strategy first

Before jumping into KPI setting, it’s essential to step back and consider what stronger productivity looks like for your business. ‘Before deciding on KPIs, you must be crystal clear about what’s actually productive in your business,’ explains Brad Walker, the founder and CEO of Adaptive Accountancy. Too often, small businesses fall into the trap of measuring activity instead of impact. ‘We all know the curse of death-by-email and the 90% of meetings that could have been an email themselves,’ Brad says. ‘Productivity isn’t about being busy. It’s about moving the needle.’

He urges small business owners to reflect on when they are most effective. ‘We’ve all said, “I stayed 30 minutes late and got more done in that time than all day!” The tasks completed in that short burst are often the real productivity drivers.’

Bigger picture

Brad’s business model is unconventional: no fixed hours, only outcomes. His team works how and when they want, as long as they meet well-defined objectives. That’s where smart KPIs come in. At Adaptive Accountancy, the team has chosen KPIs that link directly to service quality and client satisfaction.

For example, one metric is the percentage of company accounts submitted within six weeks of their financial year-end. According to Brad, this is more than an efficiency stat. ‘It gives clients eight months’ notice to prepare for their corporation tax bill; and it allows us to deliver timely advice, solve issues early, and help clients capitalise on opportunities.’ The result? Clearer financial pictures for clients, better pricing decisions, increased profits, and more referrals.

Bart van Ark, professor of productivity studies at Alliance Manchester Business School and managing director of the Productivity Institute, agrees that KPIs should align with broader business goals. ‘Identifying the right KPIs is crucial for SME leaders to boost productivity in their businesses,’ says Bart who warns that although sales and revenue targets are popular due to their measurability, they can sometimes distract from equally important but less tangible metrics, such as customer satisfaction and retention. ‘What’s important is to consider how best to measure success and collect the relevant data,’ he notes.

Team involvement

One common mistake small business leaders make is setting KPIs in a vacuum. ‘As a business leader who’s no longer deep in the day-to-day trenches, I know it would be naïve, and frankly unfair, to set KPIs without real input from the team,’ Brad says.

Team involvement creates ownership. ‘The best way to ensure KPIs are realistic is to talk to your team. Involve them directly in setting targets. This way, they’re not just being told what’s expected – they’re agreeing to it.’ This not only improves buy-in but also supports healthier workload management. ‘By agreeing together what sustainable workload levels look like, you can avoid burnout and create a culture where team members feel protected and respected, not exploited.’

Keep them simple

Tracking KPIs shouldn’t require a data science degree. Brad warns: ‘If it takes an hour and a complicated spreadsheet to work out performance, nobody will bother. KPIs must be simple, fast, and accessible – for leadership and for the team.’ When everyone can quickly see where things stand, it speeds up decision-making and enables timely feedback – both positive and corrective.

Adaptive Accountancy practices what it preaches. ‘We report on our KPIs every month to the whole team so that we’re transparent, and we evaluate the usefulness of them in our team-away days, every six months too.’ This makes KPIs dynamic rather than static, always subject to refinement as the business and its goals evolve.

 ‘Everyone should use KPIs as tools for constructive conversations, early intervention, and celebrating wins,’ says Brad. They’re there to help people succeed, not to catch them out.

When done right, KPIs aren’t just metrics: they’re levers. Used wisely, they can elevate your small business’s productivity, culture and profitability. ‘To increase their effectiveness, leaders should ensure their KPIs have an action plan,’ says Bart. That action is where progress begins.

Six takeaways

1. Identify the activities that truly move the needle: not everything that’s measurable matters, and not everything that matters is easy to measure.
   
2. Make sure your KPIs serve a larger purpose: whether it’s improving service quality, enhancing customer retention, or boosting profitability, each KPI should support your mission.
   
3. Co-create KPIs with your team to increase engagement and accuracy: jointly defined targets are more likely to be realistic, motivating, and respected.
   
4. Your KPI system should be lightweight and easy to use: if it’s too complex, people will avoid it.
   
5. Use team meetings, milestones and review points, says van Ark, to assess which KPIs are working and which need adjustment: keep the conversation alive.
   
6. Use your KPIs not just to measure, but to manage: celebrate wins and correct course quickly when things go off track.
   

And make use of the help that is available. For example, the Productivity Institute, Be the Business, and the Behavioural Insights Team recently tested a light-touch intervention known as The Strategy Bootcamp – it’s a 10-day app-based course aimed at instilling strategic thinking habits in SME leaders. Covering essentials that include KPI development, the course showed encouraging results: 80% completion rates and a marked increase in planning behaviours, such as regular strategy reviews and time dedicated to future-oriented thinking.

Further resources for helping SME leaders set KPIs is available on the Be the Business website.

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