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A Key Performance Indicator is a measurable value that demonstrates how effectively a company is achieving key business objectives. Organizations use KPIs at multiple levels to evaluate their success at reaching targets. High-level KPIs may focus on the overall performance of the enterprise, while low-level KPIs may focus on processes in departments such as sales, marketing or a call center.
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A key performance indicator (KPI) is a business metric used to evaluate factors that are crucial to the success of an organization. KPIs differ per organization; business KPIs may be net revenue or a customer loyalty metric, while government might consider unemployment rates.
In terms of developing a strategy for formulating KPIs, your team should start with the basics and understand what your organizational objectives are, how you plan on achieving them, and who can act on this information. This should be an iterative process that involves feedback from analysts, department heads and managers. As this fact finding mission unfolds, you will gain a better understanding of which business processes need to be measured with KPIs and with whom that information should be shared.
Get S.M.A.R.T With KPI Tracking
S.M.A.R.T is an acronym for Specific, Measureable, Attainable, Realistic, and Timely. (It was mentioned for the first time in a 1981 paper titled “There’s a S.M.A.R.T way to write management goals and objectives,” published by a consultant named George D. Duran.) This acronym is extremely important to keep in mind when determining if your KPI is going to be successful. When you create a KPI, you should be able to ask and answer the following S.M.A.R.T. questions:
Specific: Is this KPI too broad, or is it clearly defined and identified?
Measurable: Can I easily quantify this measure?
Attainable: Is it realistic for us to obtain this measure? Can I take the appropriate measures to implement this KPI and see changes?
Realistic: Is our measure practical and pragmatic?
Timely: Are we able to look at data for this measure on a monthly or quarterly basis as opposed to annually?
Examples Of Bad Measures & KPIs
To truly understand the good measures, let’s look at some examples of bad measures and why they aren’t S.M.A.R.T.
Examples Of Good Measures & KPIs
Now that you understand what bad measures look like, let’s look at a view good measures. Each of these are specific, measureable, attainable, realistic, and timely.
Of course, every organization is different. These may or may not be attainable for your organization. Remember that every successful KPI must have a target associated with it. Don’t be afraid to set aggressive targets. For example, if you want to measure the number of accurate deliveries within a service window, you’ll need to set your target for accurate deliveries, and then use your measure to determine whether or not you’ve met your goal.
Organization size are not important while documenting KPIs, the best practiceto get KPIs is conducting a KPI workshop, call all stakeholders and any other person interested.