How to Use Performance Indicators

Performance indicators (PIs) should be measurable and actionable. They should be goal-oriented, and the entire organization should be oriented around PI goals. In order for key performance indicators (KPIs) to be successful and sustainable, they must embody the mission statement of the firm and have buy-in throughout the organization.

Things You'll Need

• Paper Pencil Computer

Instructions

Keeping Track

1. Measure KPIs. Key performance indicators should be measurable. That is, you should be able to track the progress of the PI over time. While "future attrition" might be a desired PI, it is meaningless unless you have real data to back it up. Also keep in mind that the purpose of a PI is to facilitate improvements. If no one understands how to calculate the metric, you're walking backwards.

2. Set actionable goals for each PI. Each PI should come along with real goals that boast a certain percentage improvement, quarter over quarter. Set a goal or a target, one that is challenging, but attainable. As an example, let's say that profit margin is the primary PI in your organization. One goal is to increase profit margin by 5 percent year over year. This might require a quarterly profit margin target of a 2 percent growth every quarter. Determine the calculation and verify the validity of the data source. Be specific.

3. Assign accountability for each KPI. Lack of accountability is the best way to lower the use of performance indicators. Accountability attaches responsibility and a name to a particular goal. It also provides a point of contact for all questions, comments or concerns regarding the project.

4. Share goals with the entire organization through business updates and regular reporting. Consistent, accurate reporting that provides all levels of the organization with a simple indication of overall job performance, will help to garner buy-in and improve alignment.

5. Reward and recognize high achievers. Rewards and recognition for ideas which result in higher sales can be overlooked by senior level management. PIs provide employees with an objective target to hit and improve upon. It is also important to note that while monetary rewards are nice, certificates of achievement are also reinforcing.

References

• USAID: Performance Monitoring and Evaluation

Resources

• Microsoft: Tools for KPI Development