Question

What are key performance indicators (KPIs) and what role do they play in driving performance improvement? Share an example of a KPI. Describe what it is used to measure and/or improve.

Answer 1

Solution:

Key performance indicators are the metrics that are designed specifically for your job position to measure your performance over a period of time. The performance of the employee is judged based on the values of the KPIs. If the KPIs are well within the accepted range then the performance of the employee is considered to be satisfactory and hence the KPIs are helpful in measuring and monitoring the progress of an employee in a particular job position.

KPIs have a crucial role to play. The achievement of target KPIs means the performance is up to the mark and if the KPIs are not achieved then the performance is not up to the mark. In most the cases the performance is linked to pay and this is why employees will strive hard to complete their targets and achieve their KPIs. Hence, KPIs help in driving the performance of the employees up to an acceptable level. Hence, this is how KPIs to drive employee performance.

An example of KPI would be the meeting of sales targets. Prospecting a certain number of clients in a financial year. These are some of the examples of KPI that are widely used for sales jobs. The measure is the metrics that are relevant for the sales job performance and these metrics are used to measure the KPIs of the employees.

Hence, this is an overview of the KPIs and their use in organizations to drive performance.