Explore 30 key performance indicators (KPIs) across finance, HR, & more, to optimize your business processes efficiently. Contact us for more information!
If you're leading a team or steering a company, you know it's not always smooth sailing. How do you ensure you're on course toward your goals? That's where Key Performance Indicators (KPIs) come into play. They're not just numbers on a spreadsheet; they're your navigational tools, providing crucial insights into your organization's performance.
Think of KPIs as the compass guiding your ship. Choose the right ones, and you'll stay on course towards your desired destination. But choose poorly, and you might find yourself adrift, measuring things that don't truly matter for your success.
In this guide, we'll demystify KPIs, provide a step-by-step approach to selecting and tracking them, and offer over 30 practical examples to inspire your own KPI strategy.
Before we dive into the specifics of KPIs, let me introduce you to ClearPoint Strategy, the software that can revolutionize your performance management process. ClearPoint is an intuitive strategy planning, management, and execution platform that can transform the way you manage and monitor KPIs. With ClearPoint, you can:
One of the questions we are asked regularly is, "What is a KPI?"
A Key Performance Indicator (KPI) is a critical measure used to track and assess your organization's progress toward achieving its strategic goals.
Let's break it down:
In our experience, the most effective leadership teams track fewer than 25 measures that cut across the organization’s four perspectives: financial, customer, process, and people.
We've broken down our list of KPIs into the four categories of the Balanced Scorecard: Financial, Customer, Process and People. Make sure you select a few from each category so that your strategy is well-balanced across the organization.
Note that the right KPIs for you might not be the right KPIs for another organization. Make sure you’ve researched as many key performance indicators as you can to determine which ones are appropriate for your industry.
From there, determine which KPI targets will help you further understand and meet your goals, and then integrate them throughout your department. KPIs should match your strategy, not just your industry.
Here's a diverse selection of KPI examples to get you thinking:
1. Profit Margins:
2. Cost Efficiency:
3. Revenue vs. Target:
4. Cost of Goods Sold (COGS):
5. Days Sales Outstanding (DSO):
6. Sales by Region:
7. Expenses vs. Budget:
8. Cash Flow from Financing Activities:
9. Average Annual Expenses to Serve One Customer:
10. EBITDA:
11. Customer Lifetime Value (CLV) / Customer Acquisition Cost (CAC):
12. Customer Lifetime Value (CLV):
13. Customer Acquisition Cost (CAC):
14. Customer Satisfaction & Retention:
15. Net Promoter Score (NPS):
16. Number of Customers:
17. Customer Churn Rate:
18. Contact Volume by Channel:
19. Percentage of Satisfied Customers:
20. New vs. Repeat Site Visits:
21. Customer Support Tickets:some text
22. Percentage of Product Defects:some text
23. Efficiency Measure:some text
24. Employee Turnover Rate (ETR):
25. Response to Open Positions:
26. Employee Satisfaction:
27. Retirement Rate:
28. Knowledge Achieved with Training:
29. Internal Promotions vs. External Hires:
30. Salary Competitiveness Ratio (SCR):
Public Safety KPIs:
Financial KPIs:
Public Health KPIs:
Infrastructure and Public Works KPIs:
Community and Social Services KPIs:
Environmental Sustainability KPIs:
Education KPIs:
Clinical Performance KPIs:
Patient Experience KPIs:
Operational Efficiency KPIs:
Financial Performance KPIs:
Quality of Care KPIs:
Human Resources KPIs:
Regulatory Compliance KPIs:
The right KPIs are incredibly powerful. They not only measure progress but also motivate your team by highlighting areas where improvement is needed. Imagine a sales team with a clear KPI tied to revenue growth – that's a recipe for focused action and impressive results.
Conversely, choosing the wrong KPIs can lead you astray. If a manufacturing company only focuses on production volume while neglecting quality, they might end up with a warehouse full of defective products and unhappy customers.
There are two rules for selecting the right KPIs (key performance indicators):
To create a culture of KPI monitoring and improvement, it is essential to educate your team on the significance and use of KPIs. Ensure they understand that KPIs are tools for enhancement rather than enforcement. Additionally, establish a performance management system that is consistent, transparent, and straightforward.
Introducing KPIs into your work environment may initially present some challenges. Not everyone may fully understand what KPIs are and how they are used. Organize educational sessions to explain the concept of KPIs and highlight their importance for the organization's future.
Emphasize that KPIs are not enforcement tools designed to control behavior. For example, a customer service representative might see a KPI related to average handle time and assume that meeting the target is solely their responsibility, leading to anxiety about negative consequences if they fall short. It is crucial to correct this impression to prevent counterproductive behaviors.
Selecting the right KPIs is just the beginning; fostering a culture of monitoring, reporting, and continuous improvement is where the real work lies. To help your team embrace KPIs and motivate them to drive change, implement a performance management system that is:
By taking these steps, you can create a supportive culture where KPIs are viewed as valuable tools for personal and organizational growth.
You may be interested in: What Is A KPI Report, & How Do I Create One?
There are two common missteps made during the selection process:
Ready to craft your KPI strategy?
Here's your roadmap:
It is frequently said that “What gets measured gets done,” but how does the measuring itself get done? Below are the important steps to consider in effectively tracking KPIs as a part of your performance management framework:
While it's tempting to track every aspect of your operations, it's neither practical nor efficient. Focus on one or two critical metrics per objective that directly contribute to achieving your goals.
For example, if your objective is to improve employee training and development programs, measuring the percentage of trained employees or training hours might not be as effective as tracking the reduction in errors post-training, which directly correlates with skill development.
Tip for Selecting Metrics:
Effective KPIs should have specific characteristics. Consider these questions for each KPI:
If the answer to many of these questions is "no," consider revising or replacing the KPI.
KPIs are more actionable when specific individuals are accountable for tracking and reporting them. This responsibility often motivates the person to ensure the KPI's success.
Regularly review KPI performance—monthly, quarterly, or on another schedule. This helps identify periods of underperformance or overperformance and understand the contributing factors.
Consistent reporting to all relevant parties is crucial since many measures and goals are interconnected. Instead of using spreadsheets, which can lead to version control issues and errors, consider using performance management software like ClearPoint Strategy. Such tools allow you to create customizable KPI dashboards for different audiences, ensuring clarity and coherence across the organization.
Effective KPI tracking involves more than just choosing the right metrics. KPI dashboards provide visual summaries of your data, making it easier to spot trends and communicate progress. Specialized software, such as ClearPoint, can streamline data collection, analysis, and reporting, saving you valuable time and resources.
However, be prepared for challenges along the way:
Many organizations initially try to use spreadsheets to track KPIs, but this method often leads to issues such as version control conflicts and calculation errors. A better and simpler alternative is to use performance management software.
Tools like ClearPoint Strategy offer several advantages:
By implementing performance management software, you can streamline the process of tracking and reporting KPIs, ultimately driving better performance and achieving your organizational goals.
None of this is to say you can’t use spreadsheets to view your KPI data, but with ClearPoint, you save time and improve the information available for decision-making.
The landscape of KPI tracking is evolving rapidly. Artificial intelligence (AI) is emerging as a powerful tool for identifying new KPIs and predicting future performance trends. This exciting development promises even deeper insights and greater strategic advantage for businesses that embrace it.
If you're serious about optimizing your business, consider leveraging powerful tools like ClearPoint to transform your KPI tracking into a well-oiled machine.
With streamlined data management, intuitive dashboards, and goal alignment features, ClearPoint empowers you to make informed decisions and drive your organization towards success.
Ready to take your organization's performance to the next level? ClearPoint Strategy is your partner in not just tracking, but truly achieving your strategic goals. Our intuitive strategy planning, management, and execution platform transforms the way you manage and monitor Key Performance Indicators (KPIs), ensuring that every metric you track is aligned with your strategic objectives.
Book your free demo today and see how ClearPoint Strategy can empower your team to make data-driven decisions, foster a culture of continuous improvement, and drive your organization towards its strategic goals with clarity and confidence.
Key performance indicators are measures used to evaluate the success of an organization. KPIs can be quantitative and qualitative in nature. Quantitative KPIs include metrics such as sales revenue per employee, number of customers served by each call center agent, or revenue. Qualitative KPIs, on the other hand, may include customer satisfaction scores, quality rantings, or product reliability rates.
Organizations often use SMART criteria to create a good KPI. A SMART KPI is: Specific, Measurable, attainable, Relevant, and Time-bound. To know if your KPI is SMART, ask yourself the following 3 questions.
KPIs are important because if you don't know how you're progressing in certain areas, you don't actually know where you're going as an organization. You won't have insights into if you're making progress towards your strategic goals, or if you're headed in a direction you want. KPIs act as a 'pulse check' of your strategic plan.
What you include in your report depends heavily on your audience. There are, however, a few pieces of information every KPI report should include. It's important to show the linking goals of your KPIs, the KPI measures data and calculations, and visuals showcasing the data in an easy-to-digest format.
It's easy to convince yourself that you need to measure everything for your organization. Remember, though, that KPIs mean key performance indicators. You want to only measure the most important and influential metrics. To best identify the right KPIs, tie your measures back to your strategy goals. Make sure they relate to what you hope to achieve in your organization.
A bad KPI example is "Number of emails sent," as it measures activity without considering the quality or impact of those emails. It doesn't provide insight into whether the emails contribute to achieving business goals like customer engagement or sales growth.
A well-written KPI example is "Increase website conversion rate by 15% over the next six months." This KPI is specific, measurable, achievable, relevant, and time-bound (SMART), providing a clear target and timeframe.
Another term for KPI is "performance metric" or "performance indicator." These terms also refer to metrics used to assess the effectiveness of actions in achieving objectives.
KPI stands for Key Performance Indicator. It is a quantifiable measure used to evaluate the success of an organization, employee, or project in meeting objectives for performance.
An example of a KPI is "Customer retention rate." For instance, a company might aim to increase its customer retention rate by 10% over the next year, measuring the percentage of repeat customers.
To calculate a KPI, first define the objective and the metrics to measure. Use the formula: KPI Value = (Actual Value / Target Value) * 100. For example, if your target sales are $100,000 and you achieve $90,000, your KPI is (90,000 / 100,000) * 100 = 90%.
Measure a KPI by collecting relevant data consistently, analyzing it against set targets or benchmarks, and using tools like dashboards or reports to track progress and performance over time.
To create a KPI, start by identifying your business objectives. Then, make sure the KPI is specific, measurable, achievable, relevant, and time-bound (SMART). For example, "Increase monthly website visitors by 20% within the next six months."
OKRs (Objectives and Key Results) are goal-setting frameworks that outline what you want to achieve (objectives) and how you'll measure success (key results). KPIs are metrics that track performance toward specific goals. OKRs define goals and the steps to achieve them, while KPIs measure the performance of those steps.
Read our blog on OKRs vs. KPIs: Breaking Down The Difference
A metric is a quantifiable measure used to track and assess the status of a specific business process. A KPI is a type of metric that is specifically tied to business objectives and used to gauge success in achieving key goals.
To create a KPI dashboard in Excel, list your KPIs, input data into Excel, use formulas to calculate KPI values, and employ charts and conditional formatting to visualize the data. Pivot tables can help organize and summarize data efficiently.
The four requirements to make a KPI are: it must be specific, measurable, achievable, and relevant. Additionally, it should be time-bound, providing a clear timeframe for achieving the target.
A good KPI is written by defining a clear and specific objective, ensuring it is measurable, setting it to be achievable and relevant to the business goals, and making it time-bound. For example, "Reduce customer support response time to under 2 hours within the next quarter."
The most common KPI is revenue growth, which tracks the increase in a company's sales or income over a specified period. This KPI is fundamental as it directly reflects the business's financial health and success.