Understanding Key Performance Indicators (KPIs)

A key performance indicator (KPI) is a metric that quantifies the results of business activities to help companies monitor progress and reach their organizational objectives. Performance indicators record the specific actions or activities taken, while KPIs measure the collective outcomes of those activities. Without paying attention to these key metrics, it is difficult to know where you are headed and what steps need to be taken to get there. There can be many performance indicators, but only KEY performance indicators indicate your performance in an area that is essential for meeting corporate goals.

Before delving into examples, let's review what KPIs are and why they are a fundamental part of managing your plan on an ongoing basis. I have read a lot about objectives and it has always been confusing to me that people use the terms metrics, KPIs and key results interchangeably, as if they all meant the same thing. Business performance experts have determined that business leaders can examine results using measures known as key performance indicators (KRIs) and take corrective actions based on key performance indicators (KPIs). If you are a Perdoo user, it is recommended to save the current value formula in the key result itself (in the Description field).

However, a KPI or key result consists of more than just a metric, so you cannot use the different terms synonymously. All of these individual actions can be tracked and measured, and if they improve, better results are likely to be achieved. Note: If you designate something as a key area of your business, it's probably something you'll have to work on and monitor constantly. When setting your KPIs, you define the key areas of your business and use a metric (as well as a target value) to indicate the performance of that key area.

KPI is an abbreviation for key performance indicators, data that was collected, analyzed and summarized to aid decision making. As your organization begins to outline what your plan might look like, you'll likely realize that you'll need to reach a consensus on what your key performance indicators will be and how they will affect your company. Also known as Key Success Indicators (KSI), KPIs vary between companies and sectors, depending on performance criteria. An objective usually has between 2 and 3 key results, for the same reasons that a GPS needs 2 to 3 satellites to locate your location precisely.