After an organisation ascertains its mission and goals, it needs to implement a way to measure progress. Key Performance Indicators (KPIs) are a way to measure such progress. KPIs are measures set by an organisation to define and measure the success of the organisation. KPIs are as individual as the organisation. Some KPIs may focus on income, while others focus on client satisfaction. They may also focus on employee issues such as retention or the number of calls answered on the first ring. KPIs are quantifiable and may change as the company changes. Whatever the change may be, revisions to KPIs impact a company's success.
- Skill level:
Things you need
- Company mission statement
- Company goals
Identify and define essential factors that are critical to achieving your organisation goals. For example, a sales department may define success by increased sales success. However, sales alone is too general of a measure. A KPI accurately defines and measures increased sales. A better measure of sales success would be the number of units sold or number of sales at list price.
A school may wish to show success by measuring its graduation rate, defined as the number of students successfully completing the required amount of credits within a four-year period of time.
Denote a quantity that will represent your company's success. This quantity must be a measurable value, such as per cent, number, dollar value, etc. For example, divide the total number of students enrolled by the number of students receiving diplomas. Your target goal might be to increase this number by one per cent per school year.
Post the KPIs in places that will show all stakeholders what the target is for each KPI. Show the progress toward each target. Post the KPIs in lunchrooms, conference rooms and company newsletters. KPIs give employees a picture of what is important to the organisation.
Tips and warnings
- Limit the number of KPIs.
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