What Are KPI's

Guide to Key Performance Indicators

What is it?

Kpi stands for key performance indicator. Many different businesses use these within the workforce in order to monitor the performance of the business. An example of a Kpi could be the amount of products an employee has created. This KPI can be measured against across employees. There are a variety of different Kpi’s that businesses use in all segments.

Who Uses it?

Many different business managers use Kpi’s to monitor business and employee performance. Managers can usually create Kpi’s in the form of a percentage. An example of this would be a business creating an objective of increasing sales by 5%. This gives the business something to aim for and something to monitor.

Why is it Useful?

Kpi’s are useful to organisations as they can monitor their performance and progression via the Kpi’s created. Another example of a Kpi for a business could be to achieve pre tax profits. This creates a goal for employees to reach. However, if the Kpi is not met then the business may review their goals and find out why the target hasn’t been met. Kpi’s can also create motivation for members of staff as they have a target to work for, this will create a more efficient workforce and enables the kpi to become more realistic for the business.

Limitations

Kpi’s can also have a negative effect on employees. A kpi for an organisation could be pretty unrealistic for some employees. This will create pressure on them resulting in de motivation. It is important that a businesses kpi’s are realistic to achieve if the employee works well.

Overall, all businesses have Kpi’s, however, it is how a business manages, monitors, and sets them in order to achieve a high success rate.