What are Key Performance Indicators (KPIs), and what are best practices, tools and online templates for teams and organizations?
Definition of Key Performance Indicators (KPIs)
Key Performance Indicators (also known as KPIs) help measure the overall performance and success of an organization. Many companies use KPIs across departments to measure the success of specific groups and the organization as a whole. In addition, Key Performance Indicators are a helpful tool in decision-making since they create visibility into the measurable success factors of an organization. KPIs can also be used to understand where a team, department or organization stands with respect to the implementation of its strategies, goals and projects.
Description of Key Performance Indicators (KPIs)
Key Performance Indicators show clear indications of how an organizational is doing as measured by quantifiable metrics. KPIs allow managers and leaders to view the current results of the organization and take action that will cultivate change and improve performance (for a detailed overview of how to use KPIs with your team, visit our KPI best practices page).
The following guidelines can be used to develop KPIs:
- The first step in creating KPIs is to define your business strategy. `By collecting feedback from all functions within an organization, one can start to understand the different and ideally complementary goals that exist, and then determine what to measure to quantify these goals.
- Depending on the specific strategies and goals, it can be important to identify the different time frames for each, to determine whether some KPIs should be short term (daily, weekly, monthly) or some should be tracked longer term (quarterly, bi-annually, annually).
- Define specific KPIs by considering:
- The desired outcome
- The process by which to measure progress
- Ways to influence the outcome
- When to check in and review the progress leading up to the desired outcome
- Ensure KPIs include both Leading Indicators and also Lagging Indicators in order to create a holistic picture of overall organizational performance
- Lagging indicators help measure past performance as an indicator of what’s working, current capabilities that could be leverage, and historic results.
- Leading indicators provide information that provide insight into future performance and potential actions.
KPIs can be used in various departments such as sales, finance, customer service, operations and marketing to measure the performance of a specific plan. For example, in Sales, KPIs would measure the number of new contracts signed or the net sales-percentage growth. In Finance, KPIs would measure growth in revenue and net profit margin. Regardless of department, Key Performance Indicators provide measurements to determine the current state, and then what is needed to reach desired results.
Implementing KPIs in an organization creates a structure of accountability and expectdations that data should guide insights and decisions.
Tools & Templates
Key Performance Indicators are implemented by using a common template to capture and report data, often in the form of spreadsheets, an online dashboard or other software platform.
upBOARD's Online Key Performance Indicators Tools & Templates
Unlike most traditional Key Performance Indicators processes, upBOARD’s online KPI tools allow any team or organization to instantly begin working with our web templates and input forms. Our digital platform goes far beyond other software tools by including progress dashboards, data integration from existing documents or other SaaS software, elegant intuitive designs, and full access on any desktop or mobile device.
Learn more about upBOARD’s portfolio of other operations best practice tools and templates, including:
5 S System, Brainstorming, Business Process Re-engineering, Gemba Walk, House of Lean, House of Quality, Huddle Boards, Just in Time (JIT), Kaizen, Kanban Boards, Key Performance Indicators, Leading and Lagging Indicators, Lean Manufacturing, Objectives & Key Results, Operational Performance Management, Outsourcing Decision-Matrix, Performance-Based Budgeting, QDIP Board, RATER Model, Six Sigma, SQDC Board, SQDCM Board, Supplier Relationship Management (SRM), Theory of Constraints (TOC), Total Quality Management (TQM), Value Stream Mapping, and Zero Defects.