What are KPIs?

26 June 2018

KPIs stand for key performance indicators. They allow managers to see how effective certain functions are performing in a business. Which undeniably, allows managers to gauge how well the business is performing.

What kind of KPIs exist in a business?
  • Tracking of revenue & new customers
  • Time customers are kept on hold, customer satisfaction rating & completion of post call surveys for call centres
  • Number of sales generated for marketing teams
  • How efficient processes are & quality metrics
  • Employee turnover, engagement & time taken to fill open positions. Particularly for HR departments

Key performance indicators should be monitored over time to gauge effectiveness. In order to make necessary adjustments. Specifically, in line with the organisations strategic goals.


Leading & lagging performance indicators. What is the difference between ?

It is important to identify KPIs that clearly communicate progress. And accomplishment for your team.

Lagging indicators tell you how you have performed. e.g. financial metrics. Significantly, these types of metrics cannot review future performance.

Leading indicators are able to look forward into future performance. e.g. employee engagement improvements will lead to other improvements. e.g. participation in the business. And overall customer satisfaction.

In organisations, it is unquestionably beneficial to have a combination of lagging & leading indicators.

What are the challenges to developing effective KPIs?

Developing a good set of high quality KPIs requires a great deal of effort. Managers & members of the senior team will work together to develop a selection of important measures. Indeed, problems that may occur in the development of key performance indicators include:

  1. Over focus on financial indicators. If there is a lack of information on strategy or key objectives.
  2. Over reliance on financial indicators will not provide a good view of how a business is performing as a whole
  3. Staff may disagree over the relative importance of certain KPIs. Favouring some over others
  4. Conflict of interest and bias can occur
  5. It can be difficult to identify lead indicators
  6. Limitations with systems used to internally monitor KPIs can be restrictive. Meaning that measuring the effectiveness of KPIs can be difficult

It appears that the best way of developing the most effective KPIs is through constant review. Which ultimately requires patience and time.

management meeting

How can I use KPIs properly within my business?

It is essential to continually review KPIs in your business. So that the results generated by them remain relevant. However, it is important to understand cause and effect to certain parts of the business. For example, if customer satisfaction has increased, what has caused this? What kind of impact is it having? How can these positive results be continued into the future?


KPIs can be thought of as instruments. And are comparable of that of a thermometer. Although it is useful to know what the temperature is, what does this mean? And what may occur in the future (e.g. a storm) By using a combination of KPI data, undeniably, a much clearer picture can be built of how a business is performing.

Do you need help in developing KPIs for your business? Book a 45 minute chat with Angelina Bell today. See how she can help you build a better business.

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