Performance always matters whether you are a company or an individual. We all can agree to the fact that either we are growing or we are not. So, it makes sense to evaluate our actions over a particular timeframe. That is where the KPI is relevant.
Many people have explained what KPI is. Today, we will also dive into this subject. However, we will not go into more technicalities. Instead, we will try and figure out the real need for KPI. So, in this article, we will discuss what KPI is in the first place, then explore the core objectives and how to measure them.
Also Read: What is API and How Does It Work?
What is a Key Performance Indicator?
First and foremost, KPI stands for Key Performance Indicator. It is primarily a measurable value that can tell you about your performance over a span. Now, you can be an individual or can represent a company; KPI would give you a clear notion of how you were in a particular timeframe.
The idea is to achieve success by knowing how you have done over a period. With KPIs, you can evaluate the overall growth of your business or yourself as a professional. Now, KPIs can be of two types – High-level KPIs and low-level KPIs.
Where the High-level KPIs prioritize the overall productivity of any business or person, the Low-level KPIs deals with sales, marketing, HR, support and other crucial aspects. So, it is essential to know the objectives of KPI as it varies from one business to another. At the same time, we should figure out what influences the KPI as well.
What Should be the Objectives of Measuring the KPI?
The mark of a successful KPI is when it aspires to action. So, if we try to elaborate, the first question should be – what is the end goal of a KPI? To answer that in simple terms – the implemented KPI should have meaningful business outcomes.
We believe having a clear vision of KPI makes it successful eventually. So, down below are some of the objectives that we believe are essential for making the KPI a hit:
- Communication is perhaps the most overlooked element of KPI. Yet, it is arguably the most crucial one. The perfect communication among the company hierarchy yields fruitful outcomes more often than not.
- Accountability in decision making is equally important, and thus, it should be one of the objectives of a successful KPI. Anyone can plan anything, but the majority should be on-board with to get the desired result.
- Getting feedback from every division of a company is pivotal for attaining success. So, it would be best if you take extra initiatives to crosscheck whether the plans are working or not.
- Of course, Revenue is the key to the survival of any business. So, it makes sense that it should be an objective of KPI. Now, the question remains, how you can plan to earn maximum revenues. Based on that, you can yield a hefty profit that also sustains for a long time.
What are the Steps to Measure KPI?
Now that we have an idea about the core objectives of KPI, we should focus on the steps to measure KPI. Meanwhile, the process includes answering a few questions about your business. They are as follows:
- First of all, you should be able to figure out the desired outcome.
- The next step to observe and find out the reasons why the outcomes matter.
- The ability to measure progress should be a priority.
- We will discuss this point later, but you should ask the question to yourself – how you can influence here?
- The obvious next question is who can influence the outcomes.
- Another crucial aspect is the ability to know whether you have achieved business outcomes or not.
- You should also review the progress periodically.
How One Can Influence the KPI?
Once you know how to measure the steps of KPI, and you have the result, you should work on improving them wherever possible. Now, you can only influence KPI based on which department you are in.
Let say you work in sales, and your annual target is to increase it by 20%. So, all the steps you take to increase the sales is your influence towards a successful KPI.
If you work in risk management, you should be able to detect adverse situations and work towards it. Eventually, that will reduce the chance of any external affairs interfering in your business, which should improve the KPI results.
So, the bottom line is, if you work according to the plan, which is feasible, you should influence the KPI results significantly.
We all have heard the phrase, “Time is Money!” This is also valid here. KPI comes with a timeframe. So, whichever way you look at it, you should have a time allocated to the assigned task. The PI reports will be successful most times if you know how to utilize the available resources at a given timeframe.