Choosing KEY Performance Indicators
by Katie Orlando
One important word in the term KPI is the first one: KEY. As systems become more advanced and data departments become larger and more influential at most large companies, it seems easy for managers to get lost with a large influx of numbers, reports and data sets. That’s why it is really important to take some time to decipher the most important ones to track weekly and communicate to the team.
Some qualities of a KEY performance indicator for a dashboard/visibility board:
- Direct employee impact: KPIs should be easy for employees to have a direct impact to and gives the manager an idea of productivity and success or opportunities. Examples are # of meetings held or sales calls, as opposed to the stock price or sales that may be impacted by seasonality
- Tracked and updated weekly: Good KPIs are updated frequently enough for an employee to see themselves trending away from the average and have the opportunity to impact. Also, it is important that KPIs log activities of the employees for that week, as opposed using the week that a payment came through or the date that an insurance policy became effective. This gives managers a chance to intervene before the downward trend has been constant for a month, quarter, or even a year and gives them better insight to the root cause of a problem.
- Have a consistent baseline: KPIs are hard to understand if they haven’t been appropriately base-lined and understandable. If the system data is being pulled from has recently turned over, it may not be the best place to pull KPI data from while employees get used to it and managers understand what a good week/bad week look like. KPIs need to be able to tell employees and managers “Is this a good week or a bad week?”.
Effective KPIs are useful for evaluating employee performance, knowing when a manager needs to intervene and encouraging team mindsets. However, it is important to keep the “KEY” in KEY Performance indicator, otherwise employees/managers will be stuck with a large list of “Performance Indicators” that they are unable to digest.