Key Performance Indicator

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

What makes a KPI effective ?

Now that we know KPI stands for key performance indicator it is only as valuable as the action it inspires. Too often, organizations blindly adopt industry-recognized KPIs and then wonder why that KPI doesn't reflect their own business and fails to affect any positive change. One of the most important, but often overlooked, aspects of KPIs is that they are a form of communication. As such, they abide by the same rules and best-practices as any other form of communication. Succinct, clear and relevant information is much more likely to be absorbed and acted upon.

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 interactive and frequent process that involves feedback from analysts, department heads and managers. As this fact-finding mission unfolds, you will gain a better understanding of which business processes need to be measured with a KPI dashboard and with whom that information should be shared.

What is a SMART KPI ?

One way to evaluate the relevance of a performance indicator is to use the SMART criteria. The letters are typically taken to stand for Specific, Measurable, Attainable, Relevant, and Time- bound. In other words:

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

What are the most important key performance indicators ?

The following are the most important financial KPIs that inform business strategy.

  1. Revenue Growth/Sales growth
  2. Income Sources.
  3. Revenue Concentration.
  4. Profitability over Time.
  5. Working Capital.

What is a key performance indicator example?

Examples of Customer KPIs

  • Number of Customers Retained
  • Percentage of Market Share
  • Net Promoter Score
  • Average Ticket/Support Resolution Time.

How do you determine KPI ?

  1. Choose KPIs That Are Directly Related to Your Business Goals. …
  2. Focus on a Few Key Metrics, Rather Than a Slew of Data Points. …
  3. Consider Your Company's Stage of Growth. …
  4. Identify Both Lagging and Leading Performance Indicators. …
  5. Understand That KPIs Are Different for Every Industry and Business Model.

What is meant by performance indicators ?

A performance indicator or key performance indicator (KPI) is a type of performance measurement. KPIs evaluate the success of an organization or of a particular activity (such as projects, programs, products; and other initiatives) in which it engages

What are the 5 key performance indicators ?

Top 5 Key Performance Indicators (KPIs) are:

  1. Revenue per client/member (RPC): The most common, and probably the easiest KPI to track is Revenue Per Client – a measure of productivity
  2. Average Class Attendance (ACA)
  3. Client Retention Rate (CRR)
  4. Profit Margin (PM)
  5. Average Daily Attendance (ADA)

What is a good KPI ?

A Key Performance Indicator (KPI) is a measurable value that demonstrates how effectively a company is achieving key business objectives. Organizations use KPIs to evaluate their success at reaching targets. Selecting the right one will depend on your industry and which part of the business you are looking to track.

What are the KPI targets ?

A Key Performance Indicator (KPI) is a measurable value that demonstrates how effectively a company is achieving key business objectives. Organizations use KPIs to evaluate their success at reaching targets. Each department will use different KPI types to measure success based on specific business goals and targets.

What is a KPI dashboard ?

Key Performance Indicators (KPIs) are the most important business metrics for your particular organization. A KPI dashboard takes this a step further by bringing all your KPIs together in one place. You can see how you're performing on each different measurement, side by side.

How do you measure employee performance ?

Here are a few ways to measure and evaluate employee performance data:

  1. Graphic rating scales. A typical graphic scale uses sequential numbers, such as 1 to 5, or 1 to 10, to rate an employee's relative performance in specific areas.
  2. 360-degree feedback.
  3. Self-Evaluation.
  4. Management by Objectives (MBO).
  5. Checklists.

What are the key performance areas ?

Key performance areas refer to the areas within the business for which a person is responsible e.g. Process Improvement, Safety, and Health, Security, etc. A key performance area is further defined or delineated by one or more key performance indicators (KPI's).

How to set and measure performance goals

Establish goals in a face-to-face meeting. Work out a set of goals for each employee. …

  1. Be sure the goals are measurable and written down. This makes it easy for people to tell how they're doing.
  2. State the goals in specific terms.
  3. Suit goals to the individual.
  4. Adjust goals that turn out to be unrealistic.

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