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Demystifying Key Performance Indicators (KPIs): Types and Examples

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The basic idea of effective performance management is: “What gets measured gets done.” In an ideal system, a company develops a set of measures and objectives that extend from high-level strategic goals to the day-to-day activities of front-line employees.

If you want to have a better vision for the future of an organization, you have to keep the business goals in mind.

To do this, you have to ensure that the employees' goals are aligned with the company's goals.

This is where KPIs come into play.

What are KPIs?

KPI stands for Key Performance Indicator and is a quantitative measure of performance over time for a specific purpose. KPIs are defined as the goals that are critical to the success of an organization. They provide teams with goals to work toward, benchmarks for evaluating progress, and insights. They help leaders across the organization make better decisions.

KPIs are about more than just numbers and goals.

As you know, key performance indicators (KPIs) support all aspects of the company - from marketing and sales to finance and human resources - in strategic development. They also facilitate cross-departmental collaboration and are helpful for those involved.

Everyone in the business world knows how to keep their goals SMART. But in this article, let's see what the SMARTER technique is.

What is the difference between SMART and SMARTER? Before we get into it, let’s take a closer look at the importance and role of KPIs.

KPIs are more like road signs that keep you on the right path. KPIs help an organization set itself up for success. Any organization, regardless of size, can improve its operational efficiency by setting and measuring KPIs.

KPIs are simple but powerful tools that can take a business from good to great. Most companies use KPIs to track the status of their goals, and here's how they help drive a company's growth:

You direct teams towards the right goals:

KPIs help managers understand when and how to motivate employees to keep them empowered and engaged.

High work ethic:

KPIs help increase employee morale, which promotes a shared sense of purpose. It also promotes team and individual performance.

Alignment with company goals:

Through formal and informal processes, they help align people, resources and systems with the company's strategic goals.

The ability to anticipate and recognize challenges:

They improve company performance by helping employees communicate with each other and resolve problems faster than when working in silos.

Regular performance monitoring:

Managers can monitor and track key performance indicators, identify trends, and uncover weaknesses in their organization.

Efficient decision making:

This allows them to make effective decisions about adjusting their processes to ensure smooth business operations.


The transparency of an organization can be defined as being transparent to determine whether and how well it is doing and what it should be doing. In other words, the KPIs replace opaque walls with transparent glass so we can see what's actually going on.


Ensures that everyone is held accountable for their actions and that hard work is recognized and rewarded.

The importance of KPI

KPIs are crucial to the success of any company. They measure performance and progress toward a specific goal over time. They help keep the company's main goals in mind.

Companies use KPIs to determine whether they are achieving their key goals. The KPIs track the health and performance of the organization. The company's departments use KPIs to demonstrate the value of their efforts to the company.

Performance indicators help teams work toward goals and solve problems that get in the way of those goals. And employees use KPIs to understand how their efforts contribute to the project team's and company's goals.

But why are they so important to an organization? Let's take a closer look:

1.Monitoring the health of the company

The KPIs serve as an indicator of the health of a company. To monitor the most important indicators of a company, you only need a minimum number of KPIs. Measure the things you want to change to direct the energy in the right direction. Make sure you choose the right KPIs for your business.

2.Keep your teams on track

KPIs keep teams moving in the same direction, whether they are used to measure project success or employee performance.

3.Measure progress over time

Gross revenue, number of employees, customer satisfaction, or anything else can be taken into account. KPIs are set quarterly for you and your team so you can monitor your progress. Your HR team can then monitor them weekly to ensure they are progressing in the desired direction.

4.Improve and stay on track

You should track your key performance indicators (KPIs) and your current performance to determine how close you are to your goals. These indicators will help you determine whether you are on track to achieve your goals.

5.Hold teams accountable

Make sure everyone is doing their part by using KPIs that help employers track their employees' performance.

6.Solve problems or take advantage of opportunities

Use a dashboard that combines KPIs so you have the data you need to solve problems or take advantage of opportunities.

7.Analyze patterns little by little

If you measure the same KPIs quarterly, you may notice patterns in the data that can benefit your business in multiple ways.

What happens if KPIs are not implemented practically:

  • Lack of clarity about the company's policies creates more confusion at lower levels than at higher levels.
  • Confusing the company's actual goals with other goals such as PR goals.
  • Unable to plan long-term goals. Can't keep up with the trends.
  • No alignment between departmental and organizational goals.

Types of KPIs

There are different types of key performance indicators. It is important to implement the right KPIs according to the needs and changes required for the success of the organization. Have you ever implemented a KPI into your system and found that it doesn't produce the desired result? This is what happens when companies choose the wrong KPIs.

Let's see what the different types of indicators are:

1.Quantitative indicators

A quantitative indicator represents values such as rating scales, dollars or weight in continuous or discrete numbers such as percentages, integers or ratios. These are the simplest indicators for quantifying performance.

2.Qualitative indicators

These indicators are not numerical but are expressed in the form of feelings or opinions. Feedback from employee satisfaction surveys is an example of qualitative data.

3.Leading indicators

Leading indicators can be used to predict successful future outcomes of a business process. These are the variables that reveal longer-term trends.

4.Lagging indicators

Tracking KPIs allow the company to compare its past and current performance in a specific area.

5.Input indicators

This is a type of KPI that measures the resources required to achieve a result, such as: additional financial resources or personnel. Monitoring input indicators can help companies ensure that their resources are being used efficiently.

6.Output indicators

As the name suggests, these indicators reflect the result. By analyzing output indicators, companies can gain insight into their performance and take appropriate action. This includes the success or failure of a company's operations, sales growth, and customer review ratings.

7.Process indicators

These indicators show how well a company's processes are working and how efficient they are. They also help find necessary improvements.

8.Practical indicators

They are primarily concerned with regular feedback and observations that question the intent of a company's current operations. They provide a lot of useful information that could be exclusive to the company.

9.Result indicators

Result indicators are essential for measuring the success of a project or initiative. They help us track progress toward goals, whether they are short-term or long-term.

10.Financial indicators

Financial indicators measure the stability and growth of an organization's finances. When combined with other KPIs, this indicator can provide a more comprehensive view of the company's financial viability.

11.Actionable indicators

The potential of a company, be it through political action or a change in corporate culture, is measured by actionable indicators.

12.Directional indicators

Practical indicators relate exclusively to the company's internal processes, while directional indicators evaluate the company's performance compared to competitors.

Effective KPI practices

Introducing KPIs in an organization is not enough. It is more important to implement effective KPI procedures. Below are KPI practices that are effective for any organization.

  1. Determine which KPIs are most important to track in line with company goals.
  2. Provide transparency and clarity to highly visible KPIs.
  3. Set KPIs that are realistic and achievable.
  4. Create incentives for achieving KPIs.
  5. Schedule review meetings to track your KPIs.
  6. To avoid a flood of data, narrow down what you want to track.
  7. Use the SMARTER practice, not just SMART: Specific, Measurable, Achievable, Relevant, Time-bound, Evaluate, Reassess.

Let's look at what the SMARTER practice or the 6A's is all about.


Start with a specific goal that can be defined. Take it apart and remember that many KPIs are used to evaluate customer satisfaction, retention and other factors.


Find a precise way to measure the information you want to capture, keeping in mind that simplicity is key.

An important part of managing KPIs is that there should only be one reliable method of measurement.


Make sure the goal is easy to reach by checking its accessibility. Checking whether the organization has already achieved its goal is one approach to testing this.


Check whether the goals are relevant to the target groups. Does achieving this goal impact the people you want to reach?

And if so, how?

Time bound:

Create timelines and deadlines to properly measure the KPI. Extend the time frame for the next round if the results of the first attempts are exactly what you want.


Check whether the KPIs provide the data that can be used to achieve the set goals. Brainstorm possible alternative viewpoints that can be considered together.


Conduct repeated testing before regular rollout to ensure consistency. As effective organizational plans are based on KPIs, ensure that data provides accurate and detailed solutions.

The clever six A's:

Businesses can benefit from analytics if used correctly. The quality of the data determines the quality of the analyses. To get the right data for your business, choose the right metrics that can be used as key performance indicators (KPIs).

You can save time, effort, and money by tracking strong KPIs instead of weak KPIs to evaluate business performance.

When developing your KPIs, consider these 6 attributes to ensure they are helpful, value-added metrics.


A crucial aspect when setting KPIs is their alignment with company goals. Nevertheless, companies set short, medium and long-term goals. With so many goals, it's difficult to prioritize linking to KPIs. Set KPIs at different management levels to achieve all of these goals.


The indicator should be easy to reach so that it can be measured, i.e. reachable. If the process gets going and the data doesn't come in consistently at the end, there could be a problem.


The KPI increases others' understanding of the goal and its evaluation or makes it intense. Another indicator can be considered if the goal of the KPI is unclear.


Because the information obtained from a KPI will inform the achievement of future goals, it must be accurate and reliable to avoid misunderstandings.


The results of KPIs generate information that impacts a course of action. KPIs should drive the development of new measures, otherwise the indicator will be ineffective.


The data can be used throughout the organization's existence. They must become a constant in a sector that is constantly evolving.

Practical tips for using KPIs in your company:

Although most entrepreneurs know the importance of key performance indicators (KPIs), they often find it difficult to implement them. In reality, 90% of business metrics are collected and rarely used for decision making.

KPIs are one of the most important tools for driving the growth of an organization. The path to corporate success is challenging. You know full well that this is not a walk in the park. It is easier said than done.

Simply introducing KPIs into the organization's system does nothing. Instead, you need to know how to practically implement the KPIs in your company.

  • When selecting KPIs, consider consumer, business, and product goals.
  • Set SMARTER goals.
  • Use ratios and ranges.
  • Measuring everything that can be measured is a bad idea.
  • Avoid vain metrics. Instead, focus on metrics that show real progress and impact.
  • Make sure you use both qualitative and quantitative KPIs.
  • Also consider indicators other than those related to finances and customers.
  • Take advantage of trends: go with the flow.
  • Analyze your product regularly using a product scorecard.
  • Expectations should be clearly defined.
  • Don’t measure more than ten KPIs.
  • It's a good idea to review KPIs every week or month.
  • Make sure the list of KPIs is editable.

But let's be honest: the true indicator of success is the number of snacks you can fit in your desk drawer!

Implementing KPIs strategically is pivotal for organizational growth. With tools like IceHrm, companies can streamline KPI tracking and enhance performance.

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