Employees are the most valuable assets of an organization. Company’s productivity and profitability ultimately depend on the dedication and enthusiasm of the workers.
To prosper in today’s business environment there is a need to track non-financials measures as well. These measures encompass a huge variety i.e. quality, succession planning employee satisfaction and externally focused factors.
The key performance indicator is a term use in organization’s strategy to achieve important aspects to the accomplishment of a goal in a given period of time. Let’s first have a little idea about it.
What is KPI?
Key performance Indicators are certain metric that help you to determine how you are performing against your objectives. KPI is a really a powerful measure to support business growth.
It is something not numerical like accounting and financial measures which are easy to calculate. It is something less quantitative.
Why are KPIs important?
For a business KPIs ultimately provide a focus for the achievement of goals. By measuring some elements it is possible to establish whether you are on track to achieve your targeted goal or not.
Having KPI can unite a team to achieve a common objective to help the business succeed. KPI also direct you to a straight path towards your main focus and help you not to go off-track. Tracking KPI let you focus on opportunities to hold on which will accelerate your trajectory towards your goal.
Type of KPIs
There are three major types of KPI
Business
These are the KPI that a complete business process needs to follow. They cover a broader range and can be understood by everyone in the business. The overall success of the business depends on these KPIs.
Team
These KPIs keep the team within a business to achieve their specific departmental goals which unite to achieve the above-mentioned common business goal.
For example, sales teams KPI could be to generate more revenue through sales each month. The marketing team will set its KPI to drive a required amount of customers to generate leads. Customer Service team will follow its own specific KPI to satisfy and retain the customers to gain their loyalty.
Individual
These KPI are tied to individual performance. They let employees in a business achieve their individual tasks assigned to them by their team. The regular feedback and performance appraisals help to improve the result an individual want to achieve.
For, example a marketing manager KPI will be effectively communicating for the launch of new product.
Characteristic of KPI
KPI should be smart and tangible. They must be:
Unique: It has to be explicit and does not overlap with other KPIs.
Assessable: it must be measurable whichever method is implied.
Approved: It has to be a fair indicator approved by concerned parties.
Realistic: It should not be something superficial that is unable to achieve.
Time Specific: it should have deadlines and finite duration.
Considerations
KPI are the foundation to evaluate and track performance. It is important to have KPIs to focus on business actions to drive it towards success.