Key Performance Indicators (KPI) | Meaning and Definition

What is KPI or key performance indicators?

Key performance indicators (KPIs) are positive or negative measurable values that demonstrate how effectively a company achieves its key objectives. 

KPIs help organizations track progress, identify areas of improvement, and make informed decisions about where to allocate resources. Commonly used KPIs include measures of profits, costs, productivity, efficiency, quality, customer satisfaction levels, and key performance indicators for employees. 

Organizations should carefully select KPIs that align with their strategic objectives and consider the company’s unique circumstances and industry. KPIs should be revisited regularly to ensure they remain relevant and meaningful. 

Detailed explanation

There are a few different types of key performance indicators (KPIs) that businesses use to measure employee performance. Some common KPIs for employees include things like: sales numbers, customer satisfaction ratings, task completion rates, quality control metrics, attendance records, & more. 

The specific KPIs that a company uses will vary depending on the business & what type of work employees are doing. However, all KPIs should be based on measurable & clear data so that employees know exactly what they need to do to meet expectations. When creating KPIs, it’s important to involve employees in the process so that everyone can buy into the system & there is a shared understanding of what needs to be accomplished. 

KPI vs. Metric 

KPIs and metrics are both measuring performance, but they differ in a few key ways. KPIs are generally more high-level, measuring overall performance against specific goals. For example, a KPI for a social media campaign might be the number of new likes or follows generated. On the other hand, metrics tend to be more granular, providing information on various aspects of performance. So for the same social media campaign, metrics might include click-through rate or average engagement per post.