You can ensure that all departments are aligned with the overall goal of the business. The progress your business is making towards its goals is genuinely measurable. So let’s lay out both sides of the KPI coin. It may seem like Key Performance Indicators are the answer to all of your company’s problems.Īfter all, they ensure teams are accountable and all working towards a common goal: what’s not to love? Well, like all things in life, KPIs have their good side and their bad. This will also act as a motivator to keep them working towards success. Put simply, you need to be able to give your employees the ability to track their progress towards a goal. How will progress towards the goal be tracked? This is really a tactical question, but it’s nonetheless an important one.
The most important thing here is that the outcome can be stated in objective terms. Which team or individual is responsible for this outcome? Every KPI needs someone to achieve it, and it’ll be up to you to assign it to the best person (or people) for the job.īy which metric will the outcome be measured? This could be a percentage increase or decrease, a specific financial goal being reached, a specific number of users, and so on. What is the outcome you want to see from this KPI? In other words, you need to define exactly what benefits this particular goal will bring and how it will align with the larger goals of the company. Although there are some questions you can ask of your business to help you set quality KPI targets: Okay, so that’s the theory of a Key performance indicator - but how do you define them in practice?īecause, as we’ve discussed, all businesses are unique, there is no set-in-stone process for this.
(Because if they’re not, you’ll soon find out). For example, a certain percentage increase compared to last quarter.Ĭlearly linked to an overall goal of the business itself.Īble to be understood by anyone (even those outside of the business).īy keeping these elements in mind, you’ll be able to define KPIs which are both realistic and achievable. Properly defined Key Performance Indicators should be: Before even thinking about the specifics of your KPIs, you should first ensure you’re familiar with the format. That said, there are certain common factors which make up the essence of a good quality KPI. Again, it’s important to stress that this process will be radically different for every business depending on industry, vertical, corporate structure, and so on.
#Kpi stands for key preference indicators how to#
Now that you’re familiar with what Key Performance Indicators are, and what they may look like, let’s consider how to define them.
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