What is a critical success factor?

Critical success factors (CSFs) are high-level actions that help teams develop detailed goals and plans to achieve them. Completing CSFs can position your organization for success, potentially leading to increased revenue, greater competitiveness and other indicators of success.

You can set CSFs at various levels, including project, program or organizational. For example, a project manager may set them early in the process for every new project. At the department or program level, CSFs relate to the specific goals of that segment. The customer service department might center CSFs around resolution time or customer satisfaction. You can also create company-wide CSFs that align with your strategic vision.

Types of critical success factors

Examples of critical success factors typically fall into several common categories, including:

• Environmental: CSFs in this category address issues related to the environment in which your business operates. These issues are typically beyond your control but can significantly impact your business. Examples include the economy, infrastructure, policies and technological advancements. Anticipating and preparing for these environmental factors can help minimize any potential disruptions.
• Industry: These CSFs are based on industry trends or industry-specific factors, such as regulations that apply to your business. For example, this could mean focusing on green alternatives for processes with large carbon footprints.
• Temporal: These factors address short-lived or temporary issues. They often focus on internal growth and challenges, such as supporting a product launch, temporarily reducing staffing or navigating change.
• Competitive: These CSFs focus on how customers perceive your organization compared to competitors. CSFs in this category might emphasize positioning your organization more effectively in a specific market. For example, you could create a CSF to position your organization as the go-to option for luxury options within your industry.

How to create critical success factors

When developing CSFs for your organization, consider following these general steps:

1. Brainstorm goals with supervisors and employees

Create your strategic vision for organizational CSFs or the project plan for project-specific CSFs. This helps you identify actionable steps that can lead to success. You might start by choosing key results areas (KRAs), such as profitability or brand awareness, and then add more details.

Asking for input from team members, the leadership team and other stakeholders can provide a comprehensive view of where to focus your attention. Getting different perspectives and holding brainstorming sessions can also help strengthen your CSFs.

2. Detail your CSFs

Once you identify several areas and possible CSFs, narrow them down to the most important ones. You might look for similar or related topics that you can combine into one CSF. For example, creating a customer service ticketing system and resolving customer issues could be consolidated.

3. Announce CSF plans

Inform your employees about the CSFs by holding a company-wide meeting or brown bag lunch. For larger companies, consider meeting with departments individually. You could also create print materials to post around the office. The initial announcement can help generate excitement and motivate employees to work toward the goals.

Ongoing communication can also help your team understand where you are in terms of reaching the CSFs. Consider creating a monthly or quarterly progress report and sharing ongoing updates if the strategy shifts.

4. Implement your CSFs

Once the critical success factors are in place, you can start working toward them. This typically happens as you develop specific goals for the project or organization. Different people within your organization hold varying responsibilities for making the CSFs happen.

5. Regularly track CSF results

To determine if you’re completing the CSFs, create a system for analyzing progress. For example, you might attach key performance indicators (KPIs) to your critical success factors. This establishes metrics for evaluating progress. You can also set regular intervals for collecting data to help with the tracking process.

Why critical success factors are important

Whether you create them at the organizational, program or project level, CSFs can help everyone understand what success looks like. They’re a critical part of business goal-setting and can benefit your business in several ways, including:

• Collaboration: By establishing CSFs, you can encourage different teams, departments and employees to collaborate and implement them.
• Prioritization: CSFs help prioritize processes and programs within your business. For example, if your CSF aims to improve the customer experience, you might create a customer feedback system, loyalty program or new online shopping platform. This can help you allocate resources appropriately, saving time and money.
• Improved efficiency: The guidance provided by your CSFs can help you focus your efforts, maximize resources and improve efficiency.
• Awareness of the negative: While critical success factors identify what success looks like, they also allow you to consider possible difficulties in achieving your goals. Awareness of possible barriers or negative outcomes allows you to anticipate challenges and take proactive steps to address them. For instance, if resource constraints could delay a project, planning for alternative solutions or reallocating resources early on can keep things on track. Similarly, if team burnout is a potential risk, regularly checking in with employees and adjusting workloads can help maintain productivity and morale.
• Business growth: CSFs often focus on ambitious goals for your business, which encourages you to take risks to achieve them. They help drive growth, which can increase revenue and expand business opportunities.
• Fewer distractions: Focusing on a few high-level CSFs can reduce distractions preventing you from achieving your strategic vision.

Examples of critical success factors

These CSF examples can give you ideas on how to structure your goals:

• Establish a ticketing system for customer issues
• Increase social media engagement
• Transition to using local suppliers
• Create an online content strategy
• Improve your inventory management system
• Maintain an accident-free work environment
• Increase custom order turnaround times

Tips for implementing critical success factors

When you’re new to CSFs, you’re constantly learning and improving. The following tips can help you make progress toward your goals:

• Start small: If this is your first time with CSFs, starting small can help you ease into the process. You might do a test run first before fully committing to it.
• Assign a point person: When you have a go-to person for each CSF, they become the leader of that factor. They help keep it on track and can answer questions from other team members.
• Define your CSFs early: You typically develop CSFs in the project planning phase, which usually occurs around the same time you identify project deliverables and tasks.
• Vary your focus: Most teams work on multiple CSFs at once. To broaden the results, choose CSFs from different categories. For example, you might choose an environment, temporal and competitive CSF to start.
• Change directions when necessary: As you monitor progress, you might realize some CSFs no longer align with your needs. In this case, consider replacing them or focusing on other CSFs you have in place.

FAQs about critical success factors

What are the factors to look for when finding software to build and track your CSFs?

When creating CSFs, you can develop and track these results in a spreadsheet. You can also invest in software programs to assist in building and tracking them. When searching for an effective CSF software program, consider the ease of viewing results and progress as well as leaving comments and questions. Look for a program that allows you to assign tasks to employees easily. Additionally, consider investing in software that generates quarterly or yearly reports for employees, leadership and stakeholders.

What’s the difference between critical success factors and KPIs?

CSFs and KPIs are related but slightly different. Your KPIs establish metrics for the project’s success while CSFs define the actions you take to achieve success. For example, your CSF might improve the speed and satisfaction of resolving customer issues, while the related KPI might involve measuring the customer satisfaction score of those calls.

How many critical success factors should you have?

A general guideline is to have three to five CSFs at a time. This allows each team to stay focused and work toward achieving their goals. However, you might have separate CSFs for individual projects, teams or departments, so your organization could have more than five CSFs at a time.

Are critical success factors measurable?

CSFs should be actionable and measurable. However, a CSF itself is fairly broad, so pairing it with KPIs and specific company or project goals can help you measure success.