It is quite shocking to realize that from birth we all have Key Performance Indicators – KPIs for short. Whether it is the Apgar score right when we popped out of our mothers or how many pull-ups we could do in grade school or the hit rate for emptying the garbage on time at home – life is made up of metrics.
Often times, a metric is thought of in a negative light – we weigh too much or we don’t exercise enough or we did not make enough money this year or we shipped a delivery late to a customer. The best case scenario though is using a metric for positive performances and subsequently rewarding that individual or company for the achievement.
A Key Performance Indicator is a quantifiable factor that measures the success of key driving factors for an organization, group or individual. An effective KPI is specific, measurable, achievable, relevant and time sensitive – or SMART.
A KPI can be both long-term and short-term. There can be multiple KPI’s that make up an overarching KPI. For instance, I could set a personal KPI that I should lose 100 pounds in a two year time period – this can be broken down into roughly 4 pounds a month for those two years. This would meet the definition of a KPI.
There are dangers with KPIs – primarily related to too many KPIs and KPIs that take you away from your core strategic direction. I usually find in practice that if you have more than 7 or 8 KPI’s for an organization,
Likewise, if you have a KPI that is not in line with your core strategic direction, then