A Performance Indicator (KPI) is a numerical value that indicates whether an organization or your company is achieving its goals. KPIs are used by teams and leaders to measure the performance of the entire company and individual individuals. Tracking KPIs helps you evaluate your company's performance and make decisions based on the resulting data to find ways to grow your company. Join Giaiphapdonggoi.net to learn about performance indicators – what is KPI!
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1. Definition of Performance Indicators (KPIs)
What are KPIs?
KPI stands for Key Performance indicators - A job performance indicator is a quantifiable measure of performance over time for a specific goal. KPIs provide goals for teams to work out, milestones to measure progress, and insights that help everyone in the organization make better decisions. From finance and HR to marketing and sales, key performance indicators help every area of the business move forward at the strategic level.
2. KPI meaning vs metric significance
Although metrics and performance metrics are related, they are not the same. Here is an explanation:
KPIs are the key goals that you should track to have the most impact on your strategic business results. KPIs support your strategy and help your team focus on what matters. An example of a key performance metric is "targeted new customers per month".
Metrics that measure the success of your day-to-day business operations support your KPIs. While they affect your results, they are not the most important metric.
3. Why are KPIs important?
Why are KPIs important?
Use KPIs to boost employee morale
I think it is important to start with this value of the KPI because it is the least known.
A company's culture is extremely important to performance. A culture that supports and motivates everyone in it is destined to do better than a culture that doesn't.
In this sense, KPI tracking can be to recognize employees' hard work and ensure their sense of responsibility and accountability.
As a company grows, there can sometimes be a growing gap between the achievements of the organization and the efforts of individuals towards them. When people feel responsible for a KPI, they are more likely to push themselves and get more satisfaction from a job well done.
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Value of KPIs for business goals
KPIs are important to business goals because they keep the goal at the forefront of the decision-making process.
It is essential that business goals are well communicated within an organization, so when everyone knows and is accountable for their own KPIs, it ensures that the overall goals of the business are always maintained. are of primary concern.
KPIs also ensure that performance is measured not blindly in pursuit of KPIs but relative to larger business goals. This means that every piece of work is done with purpose and purpose.
How KPIs drive personal growth
Not every campaign or product update achieves their goals. But monitoring performance against those goals, for better or worse, creates a learning environment.
With KPIs, teams can know exactly how they are performing at any given time. They don't have to wait for the end of a quarter or project to tabulate results.
When you track KPIs, especially when you do so on a real-time KPI dashboard, you can ask what, why, how and when,... and do so whenever any. This makes learning from successes and failures a daily (rather than weekly or monthly) activity.
Another reason why KPIs are important for personal growth is based on the idea of uplifting morale. Allowing employees to track their performance and respond in the moment means they are more likely to achieve their goals and gain a better understanding of how to perform in the future.
This sense of continuous improvement allows people to achieve more than they ever thought possible, which is essential for workplace satisfaction and continued personal growth.
Importance of KPIs for performance management
I'd say this last one is exactly why key performance metrics matter.
It sums up all of the above: what is measured will be managed.
Employee morale, culture and competence, among other factors, all contribute to performance. KPIs simplify performance management by allowing people to not only see what they are doing, but also
what everyone else is doing.
This transparency ensures everyone is working in the same direction, which simplifies the lines of communication as the answer to "How are we doing?" lumped into an obvious number rather than hidden under spreadsheets and services or worse, behind guesswork. So track your sales KPIs openly, transparently to increase accountability.
4. Types of KPIs
Key performance indicators come in many varieties. While some are used to measure monthly progress against a goal, others have a more long-term focus. What KPIs have in common is that they are tied to strategic goals. Here is an overview of some of the most common types of KPIs.
Types of KPIs
Strategy: These high-impact key performance indicators monitor the organization's goals. Executives often review one or two strategic KPIs to find out how the organization is performing at any given time.
Performance: These KPIs typically measure performance over a shorter time frame and focus on the organization's processes and efficiency. Some examples include sales by region, average monthly shipping costs, and cost-per-acquisition (CPA).
Functional Units: Many key performance indicators are tied to specific functions, such as finance or IT. While IT can track resolution time or average uptime, financial KPIs track gross margin or return on assets. These functional KPIs can be classified as strategic or operational.
Lead vs Lag: Regardless of the type of key performance indicator you define, you should know the difference between leading and lagging indicators. While top KPIs can help you predict outcomes, lagging KPIs track what happened. Organizations combine the two to ensure they're tracking what matters most.
5. How to develop KPI
How to develop KPI
With so much data, it's easy to measure everything - or at least the easiest things to measure, but you need to make sure you're only measuring the key performance metrics that help you achieve your business goals. its business. Here are some methods for developing the right KPIs.
Define KPIs: Talk to the people who will use KPI reports to learn what they want to achieve and how they will use them. This will help you identify KPIs that are relevant and valuable to business users.
Align them with strategic goals: If your KPIs aren't relevant to what you're trying to achieve in your business, you're wasting time. While they may relate to a specific business function like HR or marketing, any key performance metrics should tie directly to your overall business goals.
Write SMART KPIs: The most effective KPIs follow the proven SMART formula. Make sure they are specific, measurable, obtainable, realistic, and time-bound.
Keep them clear: Everyone in the organization should understand your KPIs so they can act on them. This is the data is very important. When people understand how to work with data, they can make decisions that point them in the right direction.
Iterative planning: As your business and customers change, you may need to revise your performance metrics. Perhaps certain ones are no longer relevant or you need to adjust based on performance. Make sure you have a plan in place to evaluate and make changes to performance metrics as needed.
Avoid KPI overload: Business intelligence has enabled organizations to access heaps of data and interactive data visualizations, making it easy to measure anything and everything. Remember that the performance metric definition refers to the most important goals. Stay away from KPI overload by focusing on the most impactful measures.
6. Steps to a Stronger KPI Strategy
Steps to a Stronger KPI Strategy
If your performance metrics aren't delivering the results you want, it's time to adjust your strategy. Here are three steps you can take to make sure everyone in your organization knows what KPIs mean and how to use them to make data-driven decisions that impact your business.
Choose the KPIs that matter most: To make sure you're measuring what matters, you should include a balance between leading and lagging metrics. Lagging metrics help you understand results over a period of time, such as sales for the last 30 days. Leading metrics help you predict what might happen based on data, allowing you to make adjustments to improve results.
Create a KPI-based culture: Performance metrics don't mean much if people don't understand what they are and how to use them (including what the acronym KPI means). Increase
data insights across your organization so everyone is working toward strategic goals. Educate employees, assign relevant KPIs to them, and use a best-in-class BI platform to help people make decisions that help your business grow.
Iterative: Keep your key performance indicators up to date by revising them based on market, customer, and organizational changes. Meet regularly to evaluate them, take a close look at performance to see if adjustments are needed, and publish any changes you make so the teams are always up to date.
Above is some information about KPIs that Giaiphapdonggoi.net provides to you. Hopefully through this article you will understand KPIs based on actual numbers, actual performance will help you better control your business.
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