Key Performance Indicators or KPIs are what measure the success or efficiency of any given business, organization, or department. All entities define those measures differently, so KPIs are often specific and unique. However, the way businesses and teams create their own KPIs can be similar across the board.
Each part of the acronym KPI should be broken down individually to truly understand the best approach. So, Key, meaning only the most important metrics should be focused on. Performance, meaning looking at the results, like measures and averages, over actual activities. Finally, Indicators such as signals and trends that lead to a bigger picture rather than starting there.
KPIs should allow for a balance between seeing what is working and what has opportunity to improve. It is important to know that there are merits and benefits of how things are currently done, but it would be foolish to believe that nothing needs to changed.
There are the four critical steps to creating and supporting KPIs:
1. Figure out what your goals and objectives are: what impact do you want them to have?
2. Decide what requirements your KPIs need to follow: what will make them most successful?
3. Outline what you want to learn from these KPIs: what are the questions you need answered to better define your process?
4. List everything you've come up with, review it, and edit it: is this list clear, concise, and insightful?
KPIs can also change over time; you may think you have a perfect list, but when put into practice some may need to be tweaked or eliminated completely. With the correct Key Performance Indicators in place for you and your business, results can easily be measured; this makes it easier to compare weeks to quarters to years and so on. Perhaps most importantly you will be able to see the impact of your process, as well as your team members and see the influence you have in the business world around you.