A Key Performance Indicator, or KPI, is a metric that evaluates the performance of an objective. KPIs are at the core of any strategic planning process, providing detailed insights that guide future actions. They can measure raw numbers (e.g. # of customers), progress (e.g. % complete) or change (e.g. % increase or decrease). They can also be lagging or leading, meaning they can indicate past success (e.g. profits, revenue, expenses) or predict future success (e.g. employee engagement rate). KPIs hold teams and organizations accountable, making sure objectives are on track and targets are being met.
KPIs provide evidence of the degree to which an objective is being attained over a specific period of time. Each KPI should describe something that can actually be counted and relate back to the strategic objective. The success of using each KPI will be dependent on how effective it is at contributing to a better understanding of what drives success at the organization.
When you and your team are brainstorming potential KPIs to measure each objective, be sure to ask these critical questions:
Selecting the right metrics, or KPIs, for your organization/purpose is a special combination of an “Art” and a “Science” –there’s no perfect one-size-fits-all solution for every setting. To help you get started thinking about KPIs relevant to your specific business goals, click here to download our list of KPIs organized by function and industry. Remember, these KPIs will need to be tailored to fit your specific organization/purpose!