Key Performance Indicators definition
Also known as key success indicators (KSIs), key performance indicators help businesses and employees define and achieve their goals. KPIs are a form of performance measurement and are commonly used at both an operational level (to guide the business towards pre-determined goals) and at the staff appraisal level (to help employees stretch themselves and have an end goal in sight).
Employee KPIs often feed into operational KPIs, so that staff are working towards a goal which itself will help the organisation meet its targets.
When selecting KPIs at a higher level (i.e. for the business rather than for individual employees as part of the appraisal process), management frameworks may be used to find out what is important to the business and therefore what the KPIs should be focused on.
KPIs can be split down into sub-groups, including:
- Quantitative indicators: which can be measured numerically
- Qualitative indicators: which can’t be measure numerically
- Directional indicators: specifies whether an organisation is improving or not
- Process indicators: which measure the efficiency of a specified procedure
KPIs often follow SMART objectives, meaning they must be Specific , Measurable, Achievable, Relevant to the business and Time-dependent.
Some of the disadvantages of KPIs include measurement – popular metrics of success, such as employee engagement, can be hard to quantify. Measuring and analysing performance for the benefit of KPIs can also be expensive.