Editor’s Note: This article was originally published in July 2015. Due to popular demand, the article has been updated in September 2017 and May 2019 to include additional details and resources.
Key performance indicators (KPIs) play a role in nearly every organization. Any successful company wants to be able to meet their organizational objectives successfully—but that can be easier said than done.
Not only do you have to select the KPIs that are appropriate for your industry (i.e., municipal KPIs aren’t going to work in the financial sector), you also have to figure out how to report on them appropriately and accurately. This can be a tough step, but it’s an undeniably important one.
I’ve taken a sample KPI report—which is also commonly referred to as a KPI template or measure template—and described every element you need to implement at your own organization. But before we go that far, you first have to understand what a KPI report is, and why KPIs are critical to your company’s success.
In order to understand why KPIs are important (and thus, be able to create a successful report) you need to have a clear definition of what a KPI is.
Every organization has objectives, or high-level company goals. Key performance indicators (KPIs)—also called “strategic measures”—are both actions and tools of measurement used to monitor the progress toward achieving these objectives.
In its simplest form, a KPI is a measurement device that helps you understand how your organization is doing in regard to its goals. Effective KPIs are actionable, crucial, and easily communicated throughout the organization.
So why are KPIs important? Because they act as a proxy between your organization and the goals you’re looking to achieve.
This is simply a “strategic tracking method” that will help your organization better define and track the numbers you want to hit. Let’s say, for example, that your company wants to track “Sales By Region,” (which happens to be one of 18 very important KPIs to track)—you’d need to know what it includes, what it doesn’t include, who is in charge of making sure the information is correct, and more. If you don’t have all this information organized, you’d be fighting an uphill battle.
Additionally, you have to track an adequate amount of information to make the KPI effective. If you simply state that you want to track Sales By Region, but then don’t assign an owner, don’t analyze regional sales objectives, and don’t present the findings on a regular basis, you shouldn’t count on reaching your goals anytime soon.
If you’re looking for some examples to get started, here are a number of KPI libraries you can download:
Financial measures are important in every organization—even nonprofits and municipalities. Staying on top of your finances by monitoring the right key performance indicators is critical.
Consider these examples of financial metrics:
Your customers are the lifeblood of your company, so it’s smart to monitor metrics that will help you understand if (a) your customers are purchasing from you regularly, and (b) your marketing or product development efforts are impacting sales.
Consider these examples of customer metrics:
Top organizations all over the world are constantly trying to retain the best talent—and their ability to do so is a major indicator of company success.
Consider these examples of HR metrics:
It isn’t possible to determine whether you’re achieving your local government strategic plan without the use of KPIs. But municipalities often struggle to pinpoint the most important metrics to track and examine.
Consider these examples of municipal KPIs:
Many healthcare companies are the U.S. and around the globe have experienced major changes in their business model in the last 10 years. In order to meet new and constantly changing standards, many health-related organizations are using KPIs to evaluate progress toward their goals.
Consider these examples of healthcare KPIs:
Using either a repurposed tool like Excel or, more ideally, KPI monitoring or data visualization software, you can (and should!) build summary reports from your metrics. There are different types of summary-level views depending on the intended audience and you can include any of these in your dashboards. They can be adapted to all types of KPIs.
This matrix view shows all your measures in the far left column, followed by frequency reporting, status, monthly updates, and RAG status. This summary view works best for financial personnel or others who are number-oriented.
If you want to look at charts on how your KPIs are performing, a dashboard of your current metrics is helpful. For example, the above chart shows three different views of revenue for Upward Airlines (the hypothetical company named in the chart), which could be helpful in a board-level meeting.
This view highlights all “red” or critical measures, including who owns them, the context behind them, and when they were last updated. This is a great tool for team accountability, so you can determine who’s responsible for these metrics, whether they’re providing updates and helping the metric along, etc.
Keep in mind: It’s important to have the right balance of information in your summary-level KPI reports. There’s a time and place for long reports, but most people won’t review them thoroughly. So these summary-level reports highlight the things everyone really wants to see—and if you’re using software, readers can drill down to the detail at the right time.
Instead of describing what a good key performance indicator template should look like, I think it’s better to show you. In the below report example, the KPI is new website visits and contacts (indicated in the top left corner). Let’s walk through each section of the report so you can create a similar template for yourself.
Objectives: As previously stated, objectives are high-level company goals. The reason you’re tracking a KPI in the first place is to ensure that this particular goal is met. It should be stated in your KPI report so you keep in mind why you’re tracking a particular KPI or what you’re trying to improve in regard to your strategy. The objective listed here is to gain “new visits and contacts.” As you can see, your objective is brief and straightforward. You shouldn’t include excessive detail and reasoning at this level.
Status Icon: A colored indicator next to your objective (a yellow square, in our example) shows the current KPI status, in a quick glance. This icon can be updated from reporting period to reporting period, using easily understood red, yellow, and green visual indicators.
Measure Source and Formula: You can think of a “measure” and a “KPI” as one and the same. In our example, the report includes the measure itself and where you can find the data source that’s used to monitor and measure this KPI: The measure is the number of new visits and total new contacts, with the CRM system providing the data. There is no formula that needs to be applied to the data source involved in this example, but if there was, it would appear in this section as well. Remember, this step needs to be actionable, crucial, and easily communicated across the organization.
Measure Intent: This section should explain the why factor. When a KPI that lines up with a particular objective has been decided upon, the team assigned and the KPI owner should be able to describe (in detail) why they made the choice they did—and what tracking this KPI will reveal. In this case, the measure will help stakeholders understand the effectiveness of marketing efforts to attract and convert site visitors.
Measure Data: This is the actual data you’re using to track your KPI (CRM data, in this case). To make your life easy, build calculations to automatically show percentages. This section shows measure data in a list view, versus more graphic presentations...that’s next.
Graph: With every KPI, you have to determine how you’re going to share the information that you collect. For example, is it more important to see target, actual or your year-to-date performance, or a benchmark? Decide what is most valuable and create a meaningful chart with that information. Make sure you’re consistent and use the same chart each month, quarter, or year, so the team can track performance over time. Our example includes two visuals—an area chart displaying visits by quarter and a bar graph showing tiered contacts by month. In ClearPoint, you can add as many charts as you’d like, but only create what you need to best communicate your results.
Analysis: This section explains the qualitative reasoning behind the current status of the KPI. The KPI owner provides context that can’t be ascertained from the other sections of the report. Using language like “another record-breaking month” and “focus on converting a higher percentage” serves as further explanation of the KPIs’ status and progress.
Owner: To be successful, every KPI needs an “owner” who is tasked with tracking it—this establishes accountability. The owner can delegate reporting pieces to others as needed, but is ultimately responsible for this KPI. Clearly state the owner in this section.
Different stakeholders have different goals and organizational areas of focus. Use dashboards to provide them with the context and specific information they need about your KPIs. Dashboards can include reports (like the above example), as well as other valuable information. Here are examples of some of the most common KPI dashboards:
A KPI dashboard shows the status of the highest priority measures, consolidating the information in one place. The strategy team and executive leaders are the audience for this dashboard—the format makes it easy for them to quickly understand KPI status and progress in order to make informed decisions.
This is an overall KPI dashboard. You can build specific KPI dashboards for each department, as we’ll show you below.
Executive dashboards are focused on high-level performance. Your organization’s senior leaders need to see a clear snapshot of the status of strategic (versus operational) KPIs. The dashboard should condense broad sets of relevant information so executives can make analytical decisions that relate to strategic goals.
A financial dashboard includes KPIs related to revenue, profit margins, expenses, operational costs, etc. Any measure or project tied to your organization’s financial health would appear here, including charts that show progress on strategic financial goals and priorities. The audience for this dashboard would be the finance team and executive board.
See how individual departments, ranging from sales to account management, are performing with customer-related metrics using a department performance dashboard. This dashboard has a narrower focus than the previous examples. It showcases a specific department’s key performance metrics, projects, and goals, but can be tied to the organization’s overall strategic goals and KPIs. The audience for this dashboard is department leaders and the executive team.
KPIs around recruitment, retention, and employee performance and productivity can be displayed in an HR dashboard. These dashboards are unique because they often show metrics at varying levels, ranging from organization-wide data with the ability to drill down into team and individual information. The HR leadership team would be the audience for this dashboard.
KPI dashboards can also be tailored by industry. Local government dashboards are often used for benchmarking. Once a municipality has created its KPIs, it’s helpful to compare progress and performance to other, similarly sized governments. This helps organizations set realistic, achievable strategies and goals. The audience for this type of dashboard would be the city council, as well as community members.
Healthcare is another industry that relies on dashboards to report to various stakeholders that the organization is meeting certain standards and providing high-quality service to the public. Healthcare reporting dashboards focus on the operational performance of the facility and its staff. The audience is the healthcare department’s executive team.
Keep in mind that every organization will need to customize its dashboards, depending on the goals and the audience you’re providing information to. Having a software like ClearPoint that’s flexible enough to allow you to build as many dashboards as you want, without duplicating information, is really important.
Building KPI reports and dashboards isn’t as lengthy of a process as you think. To be successful with organizational strategy, you have to take the necessary steps and get S.M.A.R.T with your KPI tracking. Take my word for it—the extra effort will pay off once you’ve successfully achieved your company goals.
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