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All You Need to Know About Key Performance Indicators (KPIs)

Measuring the correct Key Performance Indicators (KPIs) is essential for the growth of every business. But, before using KPIs, it is important to understand their meaning, benefits and roles in the success of a venture.


Illustrative image: KPI

A Key Performance Indicator is a quantifiable or measurable value that shows the effectiveness of an organization when it comes to achieving the key business objectives. Organizations use KPIs measurement tools at different levels to evaluate their achievements at meeting pre-defined targets.


KPIs that are used at higher levels generally focus on the overall performance of the organization. Whereas the KPIs that are used at lower levels pay attention to processes in departments like, sales, HR, marketing, support, human resources, etc. It gives a clear picture of the ongoing performance levels across the organization concerning operational and strategic goals.


Importance of Key Performance Indicators (KPIs)

KPIs enable the upper management to understand how the organization is performing and its current health so that they can make critical changes and adjustments in execution to accomplish the strategic goals. Understanding and measuring the right KPIs will help the organization to achieve the desired outcomes faster.


KPI reporting is essential to make sure that all the departments and levels of the organization are working to achieve the strategic goals. Furthermore, the below-noted pointers will help us in understanding more about the importance of KPIs.


  • KPIs are used within the organization to ensure that all the teams across the company are working with the motive of accomplishing the pre-determined objectives and moving in the right direction

  • KPIs not only help in determining and achieving goals, but they also motivate teams and individuals and help them in staying focused

  • It can be measured easily and therefore provides transparency and enhances accountability across the organization

  • KPI measurement tools are ideal for doing a reality check. It provides a real status of the organization’s health, resulting in constant improvement

  • Along with identifying goals and acting as employee performance monitoring software, KPIs also play a vital role in helping business owners in making better decisions


How to choose the right KPI for your business?

No matter from which industry a business belongs, one organization can have numerous KPIs. However, organizations need to identify which KPIs are right for their growth and profitability. An ideal KPI universe should have the following characteristics.

  • KPIs should be clearly defined, attainable and do maximum utilization of existing information.

  • The KPIs should be properly aligned with the ultimate objective of the business.

  • It should be tracked and reviewed over some time, such as – weekly, monthly, quarterly, etc.

  • It should have maximum impact on the business.

  • KPIs must be dynamic and can adapt to the changing needs of the business.

  • It should not only be theoretical but also actionable.


Use of KPI as a part of the performance management system

KPIs not only play a crucial role in identifying, measuring, and aligning organizational performance towards achieving the pre-determined goals, but it also helps in creating performance management frameworks.

  • Organizations can create goals in alignment with their business strategies.

  • Help businesses in defining a balanced scorecard framework connected with the strategy map of the organization along with the performance instructions.

  • It covers all the key business areas.

  • Businesses can track the performance of the KPIs via analytics dashboards.


Interested in Learning More?

entomo is a modern performance management software built for the ‘future of work.’ Powering 30mn+ users, entomo enables ‘enterprises of tomorrow’ to drive performance by aligning goals and nudging actionable insights to manage distributed & remote teams and build a tomorrow-ready workforce.


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