How it works…

KPI stands for Key Performance Indicator

A KPI is a measurable value. It demonstrates how effectively a company is achieving business objectives.

KPIs are used by companies, teams and employees to evaluate their success at reaching important goals. High level KPIs may focus on the overall performance of the business, while low level KPIs may focus on processes within each department.

Use the SMARTER approach. SMARTER stands for Specific, Measurable, Attainable, Relevant, Time-bound, Evaluate and Reevaluate.

Asked Yourself and your team the following questions, while creating the first KPI and objective list:

• Is your objective Specific?
• Can you Measure progress towards that target?
• Is the target realistically achievable?
• How important is the target to your company?
• What is the time frame for achieving this target?
• When and how will you evaluate short term progress?
• When and how will you reevaluate longer term 
  progress

Anyone can. KPIs are also used by individuals,  to achieve health-related goals. They are are used by corporates to pursue business objectives.

There are typically departmental KPIs within a company (such as those for sales, marketing, production, support, R&D etc.). These KPIs are often created by the HODs, and the Head of department managers then ensure the team is aligned and working accordingly.

There are the overarching KPIs, typically set by the CEO and board. The KPIs of each department should be established in such a way that their sum result moves the needle for the overarching KPIs.

Let’s say your overall objective is to increae your car sales this year. Here’s how you might define the KPI:

• What: To increase car sales by 20% this year.
• Why: Achieving this goal will allow you to hire additional sales manager.
• Measure: Progress will be measured as an increase in number of sold cars and resulting revenue.
• How: Drive traffic through ads on social media to generate more traffic.
• Who: The marketing manager will be responsible for this KPI.
• Outcome: Car sales will have increased by 20% this year.
• When: KPI progress will be reviewed each month.

Determine which objective are most important to you, your team and/or your organisation. You can run it through the SMARTER approach.

Start using a KPI when you need to track progress toward a target over time.

Targets may change from time to time. Performance and progress toward those targets certainly will. AKPI from 4 months ago may not be quite as important. This is why it is relevant not to set and forget your Key Performance Indicators.

With our FlowyTeam you can review your set KPI an a real time basis via our reporting tools. You can take actions accordingly if you see a KPI will not be hit.

The fewer the better. It can be easy to creae too many KPIs and overwhelm your employees. Research propose that of 3-5 KPIs maximum per relevant objective.

KPIs and objectives are important because they give you a guideline to get you where you want to be.

All companies regardless of size and sector, that have a objective in mind and that believe having a strategy to reach those goals is relevant.