Key Performance Indicators (KPIs)

A key performance indicator (KPI) is a quantifiable figure that shows how well a business is accomplishing its main goals. KPIs are used by organizations to gauge their progress toward their goals. Low-level KPIs may concentrate on departmental activities like sales, marketing, HR, or support, whereas high-level KPIs may concentrate on the overall success of the company.

Basics of KPIs Usage

Have you ever adopted a KPI that is well-known in the industry only to discover that it is ineffective for your company? Always keep in mind that KPIs are a form of communication. Meaning that they adhere to the same outcomes and best-practices as any other type of communication: the most successful information is that which is brief, clear, and relevant. Understanding your organizational objectives, how you intend to achieve them, and who can act on the information will help you build a strategy for developing KPIs. You will develop a better grasp of which business processes belong on a KPI dashboard and with whom you should share it as you iterate and evolve.

Types of KPIs

The fact that each KPI is connected to a strategic goal is the one thing that unites them all. Here is a summary of some of the most popular KPI kinds:

• Strategic: These broad-based KPIs keep track of the objectives of the organization. Typically, executives use one or two strategic KPIs to measure the performance of the company at any particular time. Examples include market share, revenue, and return on investment.
• Operational: These KPIs concentrate on organizational efficiency and processes, and they often measure performance over a shorter time span. Examples include regional sales, monthly transportation expenditures on average, and acquisition costs (CPA).
• Functional Unit: Many KPIs are connected to particular functional units, like finance or IT. Finance KPIs track gross profit margin or return on assets, whereas IT may track time to resolution or average uptime. These operational KPIs are also categorized as strategic KPIs.
• Leading vs Lagging: Regardless of the kind of key performance indicator you choose, you should be aware of the distinction between leading and lagging indicators. Lagging KPIs track what has actually occurred, but leading KPIs can aid in outcome prediction. To make sure they're tracking the most crucial information, organizations utilize a combination of both.

KPIs Are Important, But Why?

KPIs are a crucial tool for ensuring that your teams are contributing to the general objectives of the company. Here are a few of the main justifications for why key performance indicators are necessary:

• Maintain team alignment: KPIs keep teams moving in the same direction, whether they're used to gauge project success or worker performance.
• Give a health evaluation: Key performance indicators, including risk factors and financial indicators, give you a true picture of the state of your company.
• Make modifications: KPIs enable you to see your achievements and failures clearly so that you may focus more on what is successful and less on what is unsuccessful.
• Hold your groups liable: Make sure everyone contributes value by using KPIs that allow employees to monitor their development and managers to advance the situation.

That’s why if you would like to have a certificate in KPIs, you can visit this link for our KPIs training programs