Key Performance Indicators are an excellent measurement tool that helps businesses understand how well they’re doing. A key performance indicator measures the success of an organization or project. It shows whether you’re meeting your objectives. As a business leader, you need to know what kind of results you want to achieve, and then set up key performance indicators to measure those results.
Types of Key Performance Indicators
KPIs can be set on a team basis. Here are useful points about KPIs:
- Sales’ KPI will be completely different from Human Resources’ KPIs.
- There are also many variations in the type of indicators you can measure, such as quantitative vs. qualitative.
- Some KPIs can predict future performance, such as website traffic.
- Lagging KPIs describe results that happened in the past.
- Input KPIs measure assets, time, and resource requirements to complete an action or project.
- Process KPIs assess the efficiency and productivity of your business.
How to structure your KPI
It’s fairly common for business executives to make the similar mistake of combining business metrics in with KPIs when it comes to management or reporting. As a result, many important business metrics are simply lost in reporting and other areas. It’s important that you remind yourself of the differences between the two areas: metrics and KPIs. Metrics relate directly to measurable features whereas KPIs relate directly to an important business outcome that needs measuring as well. Remembering that distinction will help to make sure your most valuable metrics are not overlooked by making sure they do not become “KPI-adjacent.”
Define the performance measures you will use to monitor your business success. By now, you should have everything in place to get started with structuring your KPIs. Build them, set them in place and get the real results coming in for regular review.