Key performance indicators
Business Link defines key performance indicators (KPIs) as: “quantifiable measurements of the improvement in performing an activity that is critical to the success of a business”. They are very detailed measures, which explain what is to be measured and how, including any definitions and targets.
They should:
- Relate specifically to a core activity – perhaps an aspect of sales, satisfaction or repeat business which is fundamental to the success of the organisation
- Reflect the vision and purpose of the organisation
- Be tailored to the needs and working style of the organisation
- Be measurable, so you can see if performance has improved or declined, and comparable over time
- Preferably, be measurable at frequent intervals, so you can identify trends and patterns
- Be capable of influence by the organisation, to give people a reason to invest effort with the aim of achieving a positive shift, or to correct a negative trend
- Be linked to targets, to give teams in the organisation something to aim for.
Sharing data on the organisation’s performance in relation to its KPIs is crucial to retaining the motivation and trust of teams and ensuring everyone has a sense of ownership of the issues. Incentivising performance linked to achievement of KPI targets.
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