What Are KPIs? How To Identify Yours and Improve Them
A KPI, or key performance indicator, can help you assess and improve your performance at work. KPIs can be used to determine how effectively you're reaching your workplace goals and objectives. Understanding what key performance indicators are and how to use them can also help you determine the direction for your future goals in the workplace. In this article, we discuss exactly what KPIs are, how to identify them and how to improve on them.
What are KPIs?
KPIs are measurable values that demonstrate how effectively you're achieving your key workplace objectives. KPIs can focus on a broad objective, such as assessing your overall performance at work, also known as high-level KPIs. They may also take a more narrow approach and focus on specific targets within different projects you work on. Key performance indicators can help you determine your existing achievements at work and how you can improve on these. This allows you to compare your achievements to others in the workplace and determine future goals at work.
Why are KPIs important?
Key performance indicators are important because they help you to identify your goals, measure success in various areas and keep objectives at the forefront of the decision-making process. They can also benefit you by measuring your performance within the overall context of the company's objectives. KPIs can give you actionable ways to achieve your goals at work. This form of goal measurement may also motivate you to perform work-related tasks to the best of your ability if you know your role is part of a larger goal.
Focusing on the goals you want to complete as part of an overall company objective can help you foster an environment of development and growth at work. Developing an effective performance indicator can involve communicating with colleagues and managers across all departments. A good KPI provides value to the business you're working for as it gives further insights, which allow you to implement effective changes. You can also use the information gained from your key performance indicators to help make valuable changes at work and build on your existing achievements and success.
Related: What Are Leadership Styles?
How to identify your key performance indicators
Knowing how to identify your KPIs helps you assess your own performance at work. Try relating your key performance indicators back to a specific objective. This objective may be related to a project you're working on or a skill you'd like to improve. Also, understanding the KPIs you have to work on can give you a clearer picture of the most important objectives to work on. Ask yourself the following questions to help determine your key performance indicators:
1. What is the desired outcome?
Your key performance indicators can reflect your goals for a specific outcome or project you're working on. Consider implementing an outcome that reflects the specific processes of your role, your industry's needs and what you want to see completed in the future. Also, try choosing a desired outcome that's achievable and measurable.
2. Why does this outcome matter?
In order to maintain your own motivation and morale, consider the reason why you're working towards a specific outcome. This helps you determine the actionable tasks necessary to achieve this desired goal. Communicating this with your work colleagues can also help motivate them, as they're able to understand their actions in the context of a wider, achievable outcome.
3. How to measure progress?
As you attempt to achieve your goals, it's important to measure the progress you're making along the way. To measure your progress, you can come up with your own internal tracking system or track your KPIs online with dedicated software. Having access to these metrics makes it easy to measure your progress regularly and see what areas need your attention so you can take action to stay on track.
4. How often to review progress?
It may also be useful to review your targets on an ongoing basis. By reviewing the progress of targets and objectives with your colleagues or on your own, you can find out your priorities and adjust the KPIs accordingly. It's also important to evolve and update KPIs over time, as certain targets may become obsolete or you may achieve your goal in one area, providing space for new goals and objectives elsewhere. You may wish to review targets quarterly, or even monthly, depending on your role and how fast you progress.
How to evaluate your KPIs
Once you've successfully identified your key performance indicators, consider evaluating them periodically to ensure they're suitable for your needs and performing as you would expect to. One way to evaluate a performance indicator is to use the SMART criteria. This acronym stands for:
Specific: Is your objective specific? Do you have a well-defined goal?
Measurable: Can you measure progress towards the stated goal?
Attainable: Are you realistically in a position to hit the goal?
Relevant: How relevant is the goal to your organisation and industry needs?
Time-bound: What is the time frame for achieving this goal?
Answer the above questions to determine if the indicators you've chosen are going to add value to the business. If using the SMART criteria, try applying it to each of your goals to determine the outcomes for each one.
How to improve on your KPIs
If you've already adopted KPIs and want to see better results, there are ways to improve their effectiveness. Consider the following tips to improve your key performance indicators:
1. Re-evaluate your goals
Consider re-evaluating your work objectives to improve your key performance indicator goals. Developing a clear set of KPIs and objectives is one of the most important elements of the key performance indicator development process to streamline your goals. You might try aligning your KPIs with the objectives of your role for a better outcome. Making this objective integral to your success at work can help when evaluating changes needed in the future.
2. Transform KPIs strategically
Try developing KPIs with a strategic focus in mind. If you've generated your performance indicators without considering this, consider reworking your plan to include them. Strategic KPIs are typically measurable and specific and encourage you to avoid vanity metrics that don't positively affect the progress of your primary objectives. They also discourage evaluating work performance based on qualitative elements, like politics in the workplace, rather than quantifiable ones, like sales and marketing data.
3. Ensure your KPIs are actionable
Effective KPIs are actionable, giving you a chance to identify the techniques and tasks necessary for achieving your goals in your role. Actionable KPIs include targets that help you achieve your objectives over a specific period. Once you've set a goal with a timeline, you can then work backwards and identify the actionable tasks you're going to need to get there.
For example, if you want to sign up 1,500 newsletter subscribers over the next six months, you're going to need to set monthly, fortnightly or even weekly targets to get there. Based on these targets, you can identify the tasks you need to carry out to achieve these goals. Actionable KPIs allow you to reassess your targets and change course as needed while working on achieving those long-term goals.
4. Communicate KPIs to colleagues
Communicating your KPIs to colleagues can help the overall success of the team. Consider coming together with all colleagues in your department to discuss the overall company's KPIs and how everyone can work together to improve the success of the business. You can take the time to explain the purpose of your objectives and how they apply to the roles of colleagues in the department. When colleagues understand how their help with generating and sustaining KPIs can create a more successful department, they may be far more likely to carry out tasks that contribute to your KPIs.
5. Allow your KPIs to evolve
It's important to evaluate the efficacy of your KPIs over time. Try to change your KPIs if you feel you can get better results from an updated version. You may seek to develop your KPIs on a regular basis and reflect the growth as often as possible. This ensures your activities within your role remain effective. This can also help you remain dynamic and be willing to evolve with your personal and business goals.
Consider your future development in your role when evaluating the performance of your key performance indicators. Check on them regularly to assess whether to maintain and develop them further, or change them when necessary.
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