What is a Key Performance Indicator?

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

photo credit: Modulatio(n) via photopin (license)


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