What is KPI?
According to the Oxford Dictionary, KPI is “a quantifiable measure used to evaluate the success of an organization, employee, etc., in meeting objectives for performance.”
KPI is the acronym for Key Performance Indicator. As the name suggests, it indicates how well a company is performing. More specifically, it relates to how well an organization is achieving its key objectives.
Essentially, it is an evaluative measure that companies employ to quantify the amount of progress they are making. KPIs can focus on the overall progress of an organization as with (high-level KPIs) as well as on processes such as support, HR, and sales (low-level KPIs).
An Effective KPI
The discussion of KPI itself proves just how important it is. However, not all KPIs are useful for businesses. Adopting too many rigid KPIs can be bad for business and shift focus away from what is important
Advantages of a KPI
Why is a KPI important in the first place?
Eradicate learning gaps
By implementing effective KPIs, you can address and close learning gaps. When you see that you are not reaching a specific goal, you can analyze your performance further and work out if any insights are missing.
Motivate employees to do better
Believe it or not - when your employees know that progress will be measured at the end of the day, they are likely to do better! KPIs empower your employees to pay attention to the business.
Having a quantifiable goal that they want to reach will give them just the zeal they need to get their tasks done.
Track your growth over time
KPIs provide you with a trackable record of your progress. This makes it easier for you to measure your success! If the results haven’t been desirable for a long time, you will be able to understand areas of weakness and specifically work on them.
Disadvantages of KPIs
However, there are certain aspects to KPIs that may be a little overwhelming for some organizations. These include:
- KPIs taking time to implement.
- KPIs having a high learning curve.
The Bottom Line
Based on our discussion above, we have concluded that the advantages of KPIs outweigh their disadvantages!
Having KPIs embedded in your business strategy can enable you to tune into your progress, and help you to see what you can improve upon.