What Are Key Performance Indicators (KPIs)?3 min read

Key Performance Indicator is a measurable value that demonstrates how effectively a company is achieving their key business objectives and goals. Organizations use KPIs at multiple levels to evaluate their success at reaching targets. High-level KPIs may focus on the overall performance of the organization, while low-level KPIs may focus on processes in departments such as sales, marketing or a call center.

Whatever Key Performance Indicators are selected, they must reflect the organization’s goals, they must be a key to its success, and they must be quantifiable.

Key Performance Indicators should also be SMART. SpecificMeasurableAttainableRelevant, Time-Bound. Ask yourself these questions below when putting together your companies KPIs.

  • Is your objective Specific?
  • Can you Measure progress towards that goal?
  • Is the goal realistically Attainable?
  • How Relevant is the goal to your organization?
  • What is the Time-frame for achieving this goal?

Once you have your SMART Key Performance Indicators in place, they then should be consistently evaluated and reevaluated based on the progress of the organization.

Key Performance Indicators can be a great measuring tool when linked to considering promotions, bonuses, salary and wage increases.

To be truly effective you should be measuring Key Performance Indicators in all area’s of the company – in fact, for each position.

  • You can measure a Key Performance Indicator in the percentage of its income that comes from return customers.
  • In sales – you might measure the performance by the numbers of people the sales person sells each day.
  • You may measure how effective your marketing campaigns are at generating increased revenue and sales.
  • You can measure your organization’s financial health by analyzing readily available working capital that could be used to meet any short-term obligations.
  • You can measure the percentage of customer calls answered with in the first three rings as a K

Understand that a company cannot manage what it is not properly measuring. What is also important to remember is in what you test & measure you usually increase.

What makes a KPI effective?

A Key Performance Indicator is only as valuable as the action it inspires. A KPI must always affect a positive change. Understand that when team members have something positive to strive for it adds an element of competition into their daily routines. When they aim for, and achieve their own personal goals, this will not only have a positive effect on the running of the business as it will have a positive effect on the team as well.

In terms of developing a strategy for formulating KPIs, your team should start with the basics and understand what your organizational objectives are, how you plan on achieving them, and who can act on this information. This should be an iterative process that involves consistent feedback.

Once you establish your KPI’s, position them by communicating them well and enrolling your team in the process and outcome. Understand that the truth is that KPIs are only as valuable as you make them. KPIs require time, effort and employee buy-in to live up to their high expectations. However their true potential value remains in the hands of those that use them and use them well.

If you would like to acquire a better understanding on how to implement Key Performance Indicators in your business or organization. Contact your coach.