Business organizations exist for profit, without which they would not be able to continue their operations. Getting the desired profit relies heavily on the ability of the company to meet its goals and objectives. And how does a company take note of the organization’s progress toward these goals? The company does it by making use of KPI. This article will help you understand more about this subject and it will also offer some KPI examples to get you started.
What is KPI?
KPI stands for key performance indicator. Its purpose is to provide accurate information about how far or how near the company is from its desired objectives. The objectives set by the company should be quantifiable in a sense that it can be measured objectively. And based on the measured outcome, the company will be able to gauge the over-all performance of its departments.
The benefits of KPI
KPIs, when employed properly by the company, can be a useful tool to achieve success in the company’s business endeavors. It allows the management to have a clear look at the performance of individuals the company is employing in all specific areas of operation. That way, the management can clearly see which among the team members is the weakest or the strongest. Another advantage is that by having specific KPIs to follow, the team can work together for the achievement of the common goals. And lastly, quick decisions can be made right away which are based on reliable data, and not by hunch or guesswork.
Some KPI examples per department (note that managers often receive reports of these indicators in the form of a KPI dashboard:
For HR department
-Percentage of new employee retention
-Percentage of newly recruited employees
-Job offer acceptance rate
For Finance department
-Percentage of late payments
-Number of business days to refund a credit
-Percentage of invoices overdue when paid
For Sales and Customer service
-Number of complaints received
-Number if new customers per week
-Percentage of sales from repeat customers
As you can see from the examples above, some don’t really fit the kind of business that you’re running. The important thing to remember is that KPIs are dependent on the goals and objectives that you want to pursue as an organization. Meaning, your KPIs may or may not be applicable to another organization. If you are having difficulty formulating your own KPIs, you can search for KPI example directories on the internet. They could be useful for you.
As a performance tool, KPIs are a great measuring stick of your success as an organization. Once you find the right metrics for your company and put them in place, your company is will soon reap the benefits.