Question

Discuss key performance indicators in a business. Find some examples of key performance indicators and describe how they demonstrate the success of a company.

Answer 1

Key performance indicators (KPI) offer the measureable value to showcase how effective the organization is accomplishing key business goals and objectives. Any organization make use of KPI at different levels to assess business success at achievable targets. Higher level KPIs gives the information of the business performance whereas lower levels focus on processes followed by departments or functions e.g. HR, marketing, sales, etc. KPIs are defined by reviewing the desired outcome and purpose of the same, who is responsible for the same, how the progress will be measured, how to influence the outcome, etc. For example, organization strategic objective is to increase the revenues through sales in coming two year, this will be termed as “sales growth KPI”. Therefore, to increase the revenue by 25% and chief sales manager will be responsible for the same and ensure on progress tracking, etc. Therefore, KPIs should be SMART (Specific, Measurable, Attainable, Relevant, Time-bound) in nature.