To know whether your company is headed in the right direction, having KPIs is crucial. But, focusing on the wrong KPIs can be detrimental to the growth of your organization. So, what makes your business performance indicators ‘key’ and how should an executive or manager select them? In this article at Learning Hub, Daniella Alscher shares some best practices for creating effective KPIs. Be sure to consider these best practices when building your business performance measurement systems.
Best Practices for Picking Up the Right KPIs
Align KPIs with Your business objectives
Remember that your business and its goals are unique, and therefore, your KPIs must be distinctive too. Having a thorough understanding of your business model helps in creating metrics that can get your organization aligned. Set different KPIs for different levels of management. Establish medium and long-term objectives for executives, medium and short-term objectives for management personnel, and short-term goals for team members.
KPIs Must Be Attainable
Set achievable targets for your team. Before setting KPIs, ask yourself the following questions:
- What are the points that I need to measure in this KPI?
- What are the cost and the potential returns?
- What are the processes do I need to introduce in this KPI to make it more relevant to stakeholders and business operators?
KPIs Must Be Actionable
One of the most important considerations to keep in mind when selecting your business KPI is whether it’s actionable or not. Daniella mentions, “The purpose of a KPI is to monitor the current success of your business as well as inform leaders and decision-makers of how that success can grow over time.” She adds, “KPIs can’t just be set; they need to be presented to the right people in the right way to encourage people to take action.”
To learn more about the best practices, click on https://learn.g2.com/kpi-key-performance-indicator.