What is KPI? Key Performance Indicator Meaning and Example

What makes a good KPI

A KPI needs a clear formula, a data source both sides trust, a target and a period. 'Improve customer satisfaction' is not a KPI. 'Average rating of 4.3 or higher in post-visit feedback each month' is. The data should come from a system, not from the employee's own spreadsheet, and the employee should be able to move the number through their own work. A telecaller cannot control lead quality, so conversion from qualified leads is a fairer KPI than total sales.

KPI vs KRA vs OKR in practice

Think of the KRA as the heading, the KPI as the scoreboard and the OKR as a push for a particular quarter. A nursing KRA of patient safety might carry KPIs such as medication errors per month and patient falls per 1,000 patient days. Those KPIs run every month, year after year. An OKR is a time-bound drive, for example cutting falls in the orthopaedic ward this quarter, with key results like a fall-risk assessment for every admission. KPIs measure the steady state; OKRs set a stretch goal for change.

KPIs at different levels

Cascade KPIs so that individual measures add up to team and company ones, and review the list every year. A KPI that nobody has discussed for two quarters should be dropped or replaced. Too many KPIs dilute focus; three to five per person is a manageable load. The HR metrics section explains common HR measures with formulas.

• Company: revenue growth, profit margin and attrition rate
• Department: time to hire for HR, days to close the books for finance
• Team: average handling time for a customer support desk
• Individual: a field sales executive's monthly collections against target

Frequently asked questions