What is a KPI?

KPIs stands for Key Performance Indicators. They are the quantifiable measures that evaluate the success of an organisation. KPIs help organisations track and monitor progress. Analysis of Key Performance Indicators shows how effectively an organisation is achieving short and long-term strategic goals. Irrespective of various departments in an organisation, key performance indicators help every area of the business move forward at the strategic level.

What are Key Performance Indicators (KPI)

Why Are Key Performance Indicators Important?

Measuring Key Performance Indicators is important to ensure the success of businesses. It ensures that all departments and teams are aligned in the same direction to achieve the set strategic goals. Here are a few reasons, why Key Performance Indicators are important for organisational growth?

Monitor Organisation’s Health

KPIs are important to measure organisational success and failures. Get an overview of what is happening in your organisation and implement ways to improve overall performance. Make data-driven decisions.

Measure progress

Keeping track of Key Performance Indicators helps organisations track and monitor progress. It aligns teams’ performance with the long-term strategic goals of the organisation and determines whether you are moving in the right direction.

Stay on track

Key Performance Indicators will help organisations predict future trends. Keep teams on track by aligning strategic goals and plans with their performance. Focusing on the same goal helps in better strategy map execution.

Boost Team Performance

Create a culture of continuous improvement. Key Performance Indicators will help teams take the right steps to deliver high impact results. Identify pain points that hinder performance and implement actions to bridge the gaps.

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Various business, government, and non-profit organisations use the balanced scorecard to align day-to-day activities with enterprise vision, mission, and values.

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Types of Key Performance Indicators

Key Performance Indicators are used at all levels in an organisation. While some KPIs are used to measure short-term goals, some focus on long-term goals. All these KPIs associated with short and long term goals finally ties together to the ultimate organisational strategic goals.

Types of KPIs- Strategic KPIs, Operational KPIs, Leading vs Lagging indicators

1 Strategic :

These are the key performance indicators that monitor an organisation’s big-picture goals. Strategic KPIs tells how the organisation is progressing during a particular time. Examples of strategic KPIs are revenue per customer, gross value, return on investment (ROI) and market share.

2 Leading vs Lagging :

Leading KPIs keeps an eye on changes and trends and help organisation or teams to manage the performance of various processes. Lagging KPIs shows us how well the system or process was managed. Organisations incorporate both types of KPIs to make. sure what they track is important.

3 Operational :

These KPIs monitor and measure performance of a shorter time period. They focus on an organisation’s processes and their efficiencies. Operational KPIs enable businesses to derive meaningful conclusions on the outcomes. Lead-to-Opportunity Ratio, Delivery Time, Transportation Costs and Production Volume are some examples of Operational KPIs.

Balanced Scorecard implementation in an Organisation

How to develop Key Performance Indicators effectively?

It is important to know what you measure, whether it is worth measuring or not. Measure KPIs that will help you reach your business goals. KPIs that you measure should be connected to both your short-term and long-term strategic plans. Once the plans are successfully deployed, they will be continuously analysed and modified with the help of KPIs.

Define your Strategies clearly

Define your overall strategy and identify the area of business performance that you wish to measure. The identified areas will have their respective KPIs in the following stages, be it financial performance or business growth.

Identify KPIs that actually matter

Make a list of KPIs and discuss with teams to identify the KPIs that are closely aligned with each strategy. Identify KPIs which promote the overall business processes and ensure that these KPIs are closely aligned with strategic plans.

Identify SMART KPIs

Follow the S.M.A.R.T framework to ensure that the identified KPIs are worth measuring. Ensure the KPIs are Specific, Measurable, Achievable, Relevant and Time-specific. SMART Key Performance Indicators are essential as they will help the management team avoid metrics that don’t impact business.

Clear and Precise KPIs

Keeping the KPIs clear lets your teams understand the KPIs and make data-driven decisions to move in the right direction. Let them know what is happening within the organisation and find ways for continuous improvement.

Revise KPIs when required

As your organisation grows, revise the KPIs that you are currently measuring. Monitor what is relevant and avoid the KPIs that are no longer relevant. Keep on updating the list of relevant KPIs to stay on track.

Balanced Scorecard Examples and KPI examples

Balanced Scorecard (BSC) and KPIs Examples

Digital Balanced Scorecard is a visual strategic planning and management tool. It aligns day-to-day activities with enterprise vision, mission, and values. Using a Balanced Scorecard tool, an organisation can analyse the KPIs associated with each strategic goal and measure their performance. By measuring performance and analysing performance strategies, the organisation will realise where they are now and what needs to be done to achieve the long or short term goals. Keeping track of Key Performance Indicators helps organisations track and monitor progress. It aligns employees’ performance with the long-term strategic goals of the organisation and determines whether you are moving in the right direction.

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Various business, government, and non-profit organisations use the balanced scorecard to align day-to-day activities with enterprise vision, mission, and values.

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Example of Balanced Scorecard KPI Metrics

Key Performance Indicators are unique for each business. Keeping track of Key Performance Indicators helps organisations track and monitor progress. KPI dashboards allow organisations to visualise, monitor and analyse KPIs in one place. Let us see some examples of Balanced Scorecard (2021) Key Performance Indicators for each department.

Measure and track your progress towards the goal and figure out ways for further improvement.

Lead Generation
Website Traffic
Sales Revenue

Lead-to-Customer Ratio
Conversion Rates

Track financial progress to optimise and achieve the organisation’s financial goals.

Return on Assets
Gross Profit Margin
Budget Variance

Cash Conversion Cycle
Working Capital

Increase patient satisfaction. Track, analyse and optimise relevant healthcare processes.

Treatment Costs
Average Stay
Bed Occupancy Rate

Re-admission Rate
Drug Availability

Key Performance Indicators in Healthcare examples

Manufacturing Key Performance Indicators provides meaningful insights on manufacturing and production-related processes.

Demand Forecasting
Cycle Time
Total Production

Machine Downtime
Planned Maintenance

Manufacturing KPIs in Balanced Scorecard

See how the Human Resource department is contributing to the rest of the organisation.

Average Salary
Absenteeism Rate
Employee Turn-Over Rate

Average Time Stay
Training Costs

Human Resource KPI in Balanced Scorecard

The customer is the King! Assist them, and find out ways to increase their level of satisfaction.

Customer Satisfaction
Service Level
Customer Effort Score

Average Speed of Answer
Issue Resolving Rate

Customer Service KPI in Balanced Scorecard

Measure the success of the business by understanding customer trends and changes.

Shopping Cart Abandonment Rate
Bounce Rate
Repeat Purchase Rate

Return on Ad Spend
Average Transaction Value

Deliver projects on time and budget by monitoring and optimising the overall process.

Server Downtime
IT ROI
Accuracy of Estimates

Average Handle Time
New Features Developed

Balanced Scorecard Information Technology KPI

Track and analyse the revenue-generating processes within the organisation.

Sales Per Employee
Monthly Sales Growth
Sales Target

Lead-to-Win Rate
Average Conversion Time

Project Management Key Performance Indicators help you understand how well you are progressing towards your goals.

Project schedule
Estimate to project completion
Current development backlog

Labour costs spent per month
Current resource allocation

Project Management KPI in Balanced Scorecard

Measure and track your progress towards the goal and figure out ways for further improvement.

Lead Generation
Website Traffic
Sales Revenue
Lead-to-Customer Ratio
Conversion Rates

Track financial progress to optimise and achieve the organisation’s financial goals.

Return on Assets
Gross Profit Margin
Budget Variance
Cash Conversion Cycle

Increase patient satisfaction. Track, analyse and optimise relevant healthcare processes.

Treatment Costs
Average Stay
Bed Occupancy Rate
Re-admission Rate
Drug Availability

Manufacturing Key Performance Indicators provides meaningful insights on manufacturing and production-related processes.

Demand Forecasting
Cycle Time
Total Production
Machine Downtime
Planned Maintenance

See how the Human Resource department is contributing to the rest of the organisation.

Average Salary
Absenteeism Rate
Employee Turn-Over Rate
Average Time Stay
Training Costs

The customer is the King! Assist them, and find out ways to increase their level of satisfaction.

Customer Satisfaction
Service Level
Customer Effort Score
Average Speed of Answer
Issue Resolving Rate

Measure the success of the business by understanding customer trends and changes.

Shopping Cart Abandonment Rate (CAR)
Bounce Rate
Repeat Purchase Rate
Return on Ad Spend
Average Transaction Value

Deliver projects on time and budget by monitoring and optimising the overall process.

Server Downtime
IT ROI
Accuracy of Estimates
Average Handle Time
New Features Developed

Track and analyse the revenue-generating processes within the organisation.

Sales Per Employee
Monthly Sales Growth
Sales Target
Lead-to-Win Rate
Average Conversion Time

Project Management Key Performance Indicators help you understand how well you are progressing towards your goals.

Project schedule
Estimate to project completion
Current development backlog
Labour costs spent per month
Current resource allocation

Frequently Asked Questions

KPI stands for Key Performance Indicators.

KPIs stands for Key Performance Indicators. They are the quantifiable measures that evaluate the success of an organisation. KPIs help organisations track and monitor progress.

Keep the SMART framework in your mind. Make sure the KPIs are Specific, Measurable, Achievable, Relevant and Time-Specific. Track and monitor the most relevant KPIs.

Measuring KPIs are important to ensure the success of businesses. It ensures that all departments and teams are aligned in the same direction to achieve the set strategic goals.KPIs are an inevitable part of organisational growth. KPIs help organisations to;

Monitor Organisation’s Health
Measure progress
Stay on track
Boost Team Performance
Make Data-Driven Decisions

Key Performance Indicators (KPIs) are unique for each business. Hence it is always better to identify KPIs that relates to your business and keep track of them.