Key Performance Indicators (KPIs) allow you to track your progress towards your goals.
For businesses this means aligning metrics with your organizational strategy. This information can be used to determine if time, energy, and money are being spent on the right things. Also to turn abstract ideas into actionable targets.
Here is a simple 6-step approach to creating KPIs.
Step #1
Determine your goal
Link your KPI to an objective that matters to you.
Make sure it is something that you can clearly identify. Also, make sure it can be quantified (measured numerically).
Step #2
Start at the end
If you were at the end of your measurement period (year, etc.), where would you want to be?
Create a clear vision of what you want to achieve. Identify a numerical representation of where you want to be.
Then, work backward to where you are today.
Step #3
Ask open-ended questions to create the path
- Where are we now?
- What specific result do we want to achieve?
- Why is that important?
- Is changing this within our control?
- How long will it realistically take to get there?
- Will this still be relevant?
- How can we define progress?
- What resources will we need?
- Can we measure this accurately?
- How often will we measure this?
- How will we know that we’ve succeeded?
Step #4
Assign ownership of this KPI
Give someone within your company the responsibility to track this KPI.
Set clear expectations at the beginning and make sure this person has access to the resources that they need.
Step #5
Report status regularly
Communicate progress, setbacks, trends, etc., to leadership and other stakeholders.
Again, set expectations at the beginning, such as:
- Frequency
- Recommend at least monthly
- Format(s)
- I.e., charts, graphs, checklists, etc.
- Time/Place
- I.e., weekly team meetings
Step #6
Review KPIs and adjust as needed
Compare your results with your goals. If you are too far off track, consider adjusting.
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