What is a Key Performance Indicator (KPI)?
Key Performance Indicators (KPIs) are the critical (key) indicators of progress toward an intended result. They help you understand if you are achieving your goals. KPIs create an analytical basis for decision making and help focus attention on what matters most. KPIs:
- Are used to improve performance and achieve goals
- Focus attention on what matters
- Provide evidence to inform decision making
“What gets measured gets done.” Measurement is an essential management tool, as it helps us determine if our work is making an impact, demonstrate value, manage resources, and focus improvement efforts.
Managing with the use of KPIs includes setting targets (the desired level of performance) and tracking progress against those targets.
Managing with KPIs often means working to improve performance using leading indicators, which are precursors of future success.
Here are 12 categories that show you different types of KPI. Note that these are not 12 separate categories, but rather 12 descriptions that show the different ways KPIs work, which can provide you with a framework for creating and choosing your own indicator.
1. Quantitative KPIs: Quantitative indicators measure objective and number-based aspects of your business performance.
2. Qualitative KPIs: Qualitative indicators refer to performance that is not linked to numbers.
3. Indicative KPIs: Indicative indicators help you predict what is likely to happen in the future based on trends.
4. Trailing KPIs: Trailing KPIs track performance that has already occurred, so you can track progress and recognize trends.
5. Input KPIs: Input KPIs help you track the resources you need to use to achieve your desired results.
6. Output KPIs: On the other side of the input indicators are the output indicators, which track the results resulting from the inputs.
7. Process KPIs: Process KPIs allow you to measure the effectiveness and efficiency of operating your business.
8. Process KPIs: Through process indicators, you can look at how processes in your business affect other parts of your business.
9. Trend KPIs: Trendal indicators measure positive or negative trends over time.
10. Actionable KPIs: Actionable indicators measure internal activity changes.
1. Financial KPIs: These KPIs track your company’s economic growth, stability, or sustainability.
12. Results KPIs: Results KPIs look at the impact of actions your company has taken