Definition
A KPI or Key Performance Indicator is a quantifiable measure used to evaluate the success of an organization, employee, etc. in meeting objectives for performance. In simple terms, a KPI is the result of a company’s steps towards their goal.
Detailed Explanation of KPI
A company can use this tool to indicate what needs to be improved. This is done on small scales such as individual performances, or larger scales such as the entire company’s goal itself.
A company needs to understand how they are “performing” and what they can do to improve their chances of achieving their goals. Every successful company utilizes a KPI, and it’s something every entrepreneur should use.
Why KPI is Important
A KPI is ideal for just about any type of business. Whether you’re a digital marketer or a content creator, you need to understand how you’re doing. The most effective way to know your performance is by utilizing a KPI.
Examples of Why a KPI Is Essential:
It helps you to see how your company is performing – No matter the size of a company, every company has a company initiative. This makes it possible for you to see how the performance of your company is over any time frame, such as a week or several months.
Helps you see how a department is performing – If you’re interested in seeing how a specific aspect of your company is operating, you can use this tool on a smaller scale. You can pick out particular departments of your company and see how they have performed over a time frame. Accomplishing this makes you understand if you need to adjust or not.
Helps you see how an individual is doing – If you’re worried about a specific worker’s performance, you can use this tool to see their performance. Doing this will make you knowledgeable about whether or not the employee needs to improve.
How to Properly Use KPI
Although using a KPI is excellent for a business to utilize, using it wrong could give you false data and influence your decision process in the wrong way. It’s essential to use this tool properly. Here is a list covering how to use a KPI properly.
Realize what your goal is – Before you start a KPI, it’s necessary to know you have a common goal throughout all the aspects of your company. You don’t want to have a changing goal every few weeks; otherwise, your KPI won’t work effectively.
Pick out a specific timeframe – If you’re looking at a particular performance, then you need to make sure you’re picking the right deadline to observe. A timeframe can be anywhere from a few days to several months. You need to do this beforehand, so you can easily classify the performance of KPI you’ll be using.
Figure out what you want to use it on – The size of the scale for the KPI is critical to know before you begin it. Whether you’re running an individual or a group of companies, realize it beforehand. Otherwise, you’ll get conflicting data from the results.
Analyze and adjust – Once you receive the data, analyze it. If need be, continue to adjust until the results meet your requirements.
