If you ask Curious George to define KPIs, his answer would either be “Number of bananas eaten in a day” or “Oo, oo, oo, Ah! Ah! Ah!”. Unfortunately, things can get a little more tricky in the world of business. KPIs can differ dramatically between company roles, teams and responsibilities, so there’s no shame in seeking a bit of help establishing them. This guide will brief you on everything you need to know about KPIs, throwing in a few examples for good measure.
But let’s start simple. What are KPIs?
While it sounds like the name of a frat house, KPIs don’t have much to do with Greek life. KPI is the acronym for Key Performance Indicator, a metric for how an individual, organisation or business progresses on their goals. In practice, KPIs judge development on a particular project or objective.
In the context of business, KPIs are used to show how well an organisation is performing.
But while this is one key performance indicators definition, the purpose of KPIs spans much further. Key performance indicators in business are just as much about progress as they are the end goal. Organisations of all sizes use KPIs as a health check — but also to hold teams accountable and keep teams aligned.
Note we’re saying KPIs, not KPI, and that’s because KPIs are more effective collectively than individually. Think of it like this — when you go for a blood test, your doctor measures the nutrient levels in your blood. B-12 levels alone don’t say much about your overall health, but if there are deficiencies across the board, that tells a bigger story.
It’s the same in business — falling short in sales is concerning, but underperforming on social media, email and paid marketing paints a picture of a deeper issue. The full scope of key performance indicators provides the knowledge needed to make more strategic decisions.
There’s an endless list of organisational and personal advantages of using KPIs in your business, but they can boil down to four main perks.
Accountability isn’t about micromanaging or playing the blame game — it’s about taking ownership over your responsibilities and rewarding hard work. Key performance indicators track team and individual performance, providing more clarity across an organisation.
An organisation that doesn’t measure progress or success is vulnerable to wasting time on a strategy that isn’t working. KPIs put everything out in the open, providing the opportunity to pivot if one approach isn’t productive.
One of the biggest challenges in business is effective teamwork. KPIs encourage individuals and teams to work toward a common goal and measure achievements collectively. They align each person working on a project by establishing a baseline of priorities and expectations.
KPIs are a business health check — they allow businesses to see how they’re performing. With weekly check-ins and quarterly check-ups, KPIs can effectively track performance in any department.
If you were to search for ‘KPIs examples’ online, you’d sift through hundreds of vague 3-word metrics that may or may not make much practical sense. One impactful way to approach KPIs is through the SMART framework.
SMART stands for Specific, Measurable, Achievable, Relevant and Time-bound. But what does that mean in the world of KPIs?
Following this structure, a generic KPI like ‘conversion rate’ becomes ‘Improve EDM conversion rate by 5% by July 1’. The SMART KPI is more actionable and clearly defined.
If you’re looking for some inspiration, you’ve come to the right place. Here are some examples of SMART KPIs across different departments and industries.
Traditionally, companies report KPIs quarterly. The easiest way to track them is with an online dashboard that managers can share with their team. You’ll find no shortage of KPI software online to help you keep track of them.
However, while we at Tability appreciate the value of KPIs, we like to elevate performance using another tracking method called OKRs. What are OKRs? The Objectives and Key Results (OKRs) framework is a goal-setting methodology that both measures and strengthens business progress.
That being said, there’s no harm in keeping your KPI software alongside your OKRs software. It’s actually easier to create OKRs if you have a clear set of KPIs. Using OKRs, your SMART key performance indicators become your key results, deriving meaning from a business objective that changes as often as quarterly.
Read more about the similarities and differences between OKRs and KPIs, or try your hand at creating your first OKRs plan using key performance indicators with a free trial of Tability.