What Are Some Tips for Setting Key Performance Indicators?


Quick Answer

Tips for setting key performance indicators include focusing on the most relevant metrics to the company or department in question, identifying areas with clear and measurable data points, and defining the ideal success level within realistic terms. The indicators should also take into account other relevant aspects of the company to determine the most actionable and effective standards for improvement.

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Full Answer

Key performance indicators allow a company to track important areas to determine the effectiveness of employees and their actions, as well as identify segments in which the company needs to improve. When choosing a key performance indicator, the manager should focus first on the aspects of the company's actions that are most relevant to its success. This ensures that the focus falls on an area with a direct impact on the company and thus is more likely to feature observable results as the employees make changes to meet the new expectations.

These areas typically also feature a clearly measurable metric, such as the number of successful sales calls in a week or the total amount of units a manufacturing plant produces in a hour. If the area does not feature a method for quantifying the action, it may not be a good performance indicator or the company may need to implement a system for tracking it more effectively. The area also needs to feature a realistic ideal goal that the company can achieve with its current means to obtain a positive effect on the business.

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