Every organization has targets and objectives to achieve at the individual and team levels. Key performance indicator(KPIs) is used to measure the performance. The organization uses the data to back up how hard has their team worked.
The data of employees is analyzed to see if everyone is working on the right thing and does their work achieves the organization’s needs.
So, let’s discuss KPI in detail.
What is KPI?
KPI is a quantifiable performance indicator metric that analyzes how the organization is working to achieve its goals and objectives. It helps to determine the financial and operational achievements of one company compared to others.
It helps the people across the organization to make better decisions. Whether it is HR, finance, or marketing team, KPI helps every area of business to plan strategically.
What is measured in KPI?
KPI usually differs from business to business, but in general, it is measured on:
- Profit margin
- Revenue growth
- Revenue per client
- Client retention rate
- Customer satisfaction
Why KPI is important?
KPI helps in ensuring that the teams in an organization are working and supporting the overall goals. It helps in:
It helps in analyzing the success and the failure, which in return helps in understanding what is working in the positive direction for the company.
Holding teams accountable:
It helps in tracking the progress of teams and individuals and moves things along accordingly.
Checking the different aspects:
KPI gives a realistic look at the things like the organization’s risk factors or financial indicators.
Keeping all the teams on the same track:
KPIs keep the teams moving in the same direction, whether to measure project success or employee performance.
How to set the right KPIs?
It is very important to take the right approach to set KPIs. It is a valuable tool to manage any organization’s performance. In case of not having the right approach to set up a KPI, you might face problems like not having a clear idea of how to measure goals.
Therefore, there is a need to set clear KPIs, and you can do that using the following:
- Have a clear idea of what performance measures in KPIs. Without knowing that, the lines can become blurry about what is and isn’t KPI.
- If you have an existing KPI or performance measure, evaluate and decide what you want to keep from that and whatnot for the future.
- Check if your goals are measurable or not before the development of any of the performance measures.
- Never use brainstorming to set KPIs as it only gives out not so useful results, Instead go for the PuMP measure design technique as it helps in developing clear measures from relevant evidence of the goals.
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