What makes a good KPI (key performance indicator)?
- KPIs are a more manageable way of understanding performance. They should reflect the organisations goals and strategy to ensure that they are relevant in helping to measure the success of the organisation.
- KPIs should be concise and easy to understand with a clear definition. Complex definitions are often one of the biggest challenges with misunderstanding what the KPI is and how it is measured.
- KPIs are quantifiable. KPIs must be measurable, as this is what adds intelligence and credibility to business decision making.
- KPIs should look at long term considerations and are comparable over time. Ultimately they help an organisation understand the direction of performance. Reviewing trends over time also helps to add context to performance.
- KPIs are measured regularly. Monitoring monthly, quarterly, or any time that is regular enough for your organisation to react to changes in performance. It is crucial that KPIs are not only measured and monitored, but they are also managed and acted upon.
Once this step is completed the next stage you need to move onto is effective risk management.