If you are looking to improve the performance of your organization as well as the individuals within it then you will benefit by using key performance indicators (KPIs). Key performance indicators allow you to:
To achieve these benefits you must choose the right KPIs, which is something that doesn’t come easily. Here is the BrightGauge Guide to choosing KPIs:
Many wonder what the differences between a KPI and a regular metric are. It can be difficult to tell the difference, especially when you realize how closely the two are related.
Every KPI is a metric, and every metric has the opportunity to be a KPI (for the right company). So what’s the key to identifying your organization's KPIs?
First, for it to be a key indicator, it must be critical and relevant to the organization’s success. As this Industry Week article suggests, KPIs should measure performance toward the strategic objectives that you’ve laid out as part of your organization’s performance plan. It is absolutely critical that these KPIs measure the most important factors in achieving your success. Stay away from the minutia.
Next, KPIs must be quantifiable, controllable, and repeatable. If team members cannot influence the outcome, you’ll find it difficult to gain their buy-in. Selected KPIs might include improved customer service response rate, increased revenue from the sales team, or a decrease in past due receivables.
A key indicator means the outcome or expectations are measurable. KPIs are a gauge. They should have a specific expected outcome that you can track over time. Finally, when it comes to choosing the right KPIs for your organization, consider your main purpose is to determine how to drive business performance.
Well, the short answer is 3, but things are rarely that simple. You’ve got several different departments and people at different management levels who will all be focused on different goals.
The real number of KPIs will depend on the size of your business. So instead of just three KPIs, follow the rule of threes. The best way to explain is with a realistic example of a larger organization’s KPIs:
As you can see, upper level management has 3 KPIs and mid level management has 3 KPIs per department. This doesn’t mean that each department needs 3 unique KPIs, they often will share KPIs like Sales Growth and NPS in the example above.
There is no universal rule when it comes to how often you check your KPIs. Each metric is different and every company is different, so where one company may check theirs daily, weekly could be sufficient for another.
We recommend you don’t go longer than a week without checking KPIs, but feel free to experiment and see what works for your company! We keep ours on a dashboard in the BrightGauge HQ so that anyone on the team can tell with a glance how we are performing:
The Service Ticket KPIs dashboard at BrightGauge HQ
KPIs will increase performance so long as they meet the following conditions:
Examples of KPIs that will increase performance are:
KPIs that wouldn’t increase performance are:
Yes… and no.
The KPIs you choose should be able to be impacted by the actions of managers and staff, but you don’t want them to have direct control over the metric. A great example of how controllable a KPI should be is Net New Customers.
Net New Customers can be impacted by the actions of sales and marketing staff, but short of buying the product themselves, there is no way to directly control the KPI. This forces your staff and management to generate and close more leads, increasing performance.
Even if you choose the best KPIs, a lack of visualization tools can hinder your ability to increase your business’s performance. In order to ensure you’ll be increasing performance on all levels you should be displaying your KPIs on dashboards around the office and in reports distributed amongst your team.
Our customer, Nucleus Networks, uses dashboards throughout their office to display KPIs
KPIs are a useful tool for creating a high-performing culture. They allow you to balance quantitative and qualitative measures to understand desired performance, but in order to achieve these benefits you have to remember to:
Need KPI inspiration? Check out 70+ metrics for MSPs, plus their accompanying formulas:
