The Canada Revenue Agency (CRA), the organization responsible for collecting your tax revenue, has four main goals: providing exceptional service, improving tax compliance, acting with integrity, and leading through change innovation. Each year, the CRA measures its performance using key performance indicators (KPIs). The CRA establishes performance goals and sets targets for each indicator. Tracking the CRA’s KPIs provides insight into what behaviors the CRA plans to change pertaining to charity administrators, nonprofits, and small business owners. Tracking this information also provides an example of how you can apply KPIs to your own organization.
What Are Key Performance Indicators?
Key performance indicators are quantifiable measurements that allow managers to evaluate the organization’s success over time. If you want your business to thrive, it’s best to develop KPIs around measures of growth, such as revenue growth, customer growth, net income growth, and transaction growth. The type of KPI you develop also depends on your industry. Energy companies have different measures of success than software companies. Targets may also vary by industry. Gross margin in the retail industry is generally much lower than it is in the banking industry, for example. In addition to financial KPIs, there are also nonfinancial KPIs. These are important for indirect or support functions. Common nonfinancial KPIs include transactions, turnover, customer satisfaction, and customer complaints.
Charity KPI Examples
The CRA provides 12 key performance indicators each department uses as a guide in the creation of its own KPIs and targets. One goal the CRA sets ensures that registered charities and applicants for charitable status receive timely service, ensuring that the CRA serves its charitable community faster. One of the CRA’s performance indicators centers around improving response times for calls regarding charities. Workers must respond to these calls within two minutes, and the goal is for this KPI to be at or above 80%. Another charity-related KPI the CRA adheres to is the percentage of charitable registration applications that receive a response within the established time frames. The CRA strives to keep this number at 80% or higher. In addition to charity service response times, the CRA has KPIs to measure the detection of charity noncompliance, charity phone inquiry response times, and charity written inquiry response times.
Business KPI Examples
In addition to charities, the CRA has KPIs specifically related to dealings with small- and medium-sized businesses. One of the CRA’s primary KPIs is striving to ensure that at least 90% of known businesses, especially small businesses, in Canada are registered for GST/HST. The CRA also wants to detect small business noncompliance at least 75% of the time through risk assessment audits. There are KPIs related to making your experience with the CRA a better one, including shorter phone response times. The CRA establishes a KPI for ensuring that taxpayers and businesses can access information and services they need to comply with tax laws 100% of the time. There’s also a KPI target for business tax filers to receive accurate assessment notices 100% of the time.
Create Your Own KPIs
If you don’t have goals for your business, it may be a good time to establish some. KPIs provide a simple framework for creating a goal, finding a way to measure goal attainment, and establishing a target. These three things can help you create your own KPIs and associated targets. Like the CRA, you can create a few high-level goals for your small business and then use KPIs to measure and track them.
Most businesses want to increase sales. Develop a KPI based on price or volume that you can reliably measure and track over time. For instance, percentage increase in average price or percentage increase in average volume are both examples of KPIs that directly connect to sales. You also want each indicator to contribute to your overall goal of running the business, have a target, and provide an actionable change that you can attach to the attainment of the goal.
Imagine you own a distribution plant with multiple operating lines. Employee turnover is high, and you need a way to reduce the rate of errors with new hires. Your KPI is the number of errors in a week or month. A reduction in errors is the goal, and your target is 100% accuracy. One change you can implement is requiring all new hires to write with a red pen. If old employees write with a black pen, all writing in red is highlighted and easier to check. Define your goal, then use KPIs as a way to set your goal and measure your performance toward that goal.
The CRA uses KPIs to help improve services for organizations across Canada, specifically businesses and charities. By using KPIs, the CRA has a means of measuring and tracking goal attainment from a centralized location. Each department at the CRA is responsible for developing specific KPIs that address its specific needs.
Following the CRA’s use of KPIs to achieve operational milestones is a way to gain valuable insights about the CRA. It also provides an example framework of how to use KPIs to reach your own business goals. QuickBooks is another tool you can use to stay on track. Use QuickBooks to assist with managing your business. QuickBooks Self-Employed app helps freelancers, contractors, and sole proprietors track and manage business on the go. Download the app.