What is a KPI?

By admin, August 22, 2009 3:58 pm

A KPI, or Key Performance Indicator, is basically a measure of something that’s important. It’s usually employed as a business term as a means of monitoring how well a business is doing. If you can identify which measures (metrics) are Key to your business Performance then you can create an Indicator that monitors how well your business is doing.

A simple example might be car sales room. The Key Performance Indicator here might be the number of cars sold per week. If you can see at a glance whether you’ve exceeded your target sales for the week then you’ll know whether you’ve exceeded your KPI and you’re going to make a profit.

Business KPIs are rarely that simple and it’s usual for a business to have many KPIs in different areas of the business. For example manufacturing may have a whole set of KPIs based on numbers of items produced and the quality of these. Sales may have KPIs based on turnover. Human resources may have KPIs based on staff retention.

KPIs don’t only apply at the management level of a business. As a company’s goals filter down to each individual employee then everyone in the business has their own personal set of targets and subsequently KPIs. In this context a KPI can be seen as a measure of progress towards a goal. Anyone implementing SMART gaols will see the benefit of using KPInator as a means to Measure their own personal performance towards their goals. KPInator can be applied throughout the organization to keep your business on target and successful.

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