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Running an organization without key performance indicators (KPIs) is like going on a journey without a map or a guide. KPIs are maps or guides that provide insights on how to run a business or organization.

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KPI stands for key performance indicator, and it provides a guide for employees to work with and helps them make better decisions.

Generally, KPIs are metrics or targets set by an organization for the employees to meet at a given period. These metrics measure the success of every business activity carried out in your company.

KPIs are important in every area and sector of a business ranging from marketing to sales, operations, product management team, finance, etc. This is because KPIs are the key targets you should track to make the most positive impact on your business.

How to set Effective KPIs for your Employees

Determine the Function of the KPI

The first step in setting KPIs is to identify and understand how these performance indicators will be used to monitor the progress of employees and everyone in the organization.

As a business owner, you can decide the function of the performance indicator with your employees and other members of the organization or company.

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This will determine everyone’s performance indicator and what they are expected to do to meet up with the company’s expectations.

Establish the Context of your KPI

Business owners often mistake the context of your KPI with the function.

They sound similar, however, after identifying the function of your KPI, it is important to clarify everyone on the context of the KPI.

This involves explaining the circumstances that surround the people involved, what they are expected to do, how they are expected to carry out their duties, and when they are expected to achieve a certain goal.

Simplify your KPI

If you want your KPI to be effective, the idea is to keep it simple and understandable.

While setting a KPI, ensure that it is easily comprehended and easily measurable, and feasible as well.

Your KPI should exude simplicity so much that your employees should be able to take prompt and positive decisions instead of asking so many questions.

Not only should your KPI be simple, but it should also be clear so that everyone involved would know precisely how to take action.

Align KPIs to Organizational Goals

One of the easiest tips to having effective KPIs is by aligning or linking them to the goals of the organization or company.

KPIs should reflect the goal and mission of your company.

That means it should align with the overall objective of your business strategy.

That way, it is easier to stay on track with the goals of the company.

Review and Audit KPIs when Necessary

KPIs are not supposed to be rigid, effective KPIs are expected to be flexible enough.

This means that as a business owner, you can diversify or make necessary changes to the existing KPI.

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This is because some market conditions can vary and certain operations in the company might need changes.

When such arises, you may need to revise the previously set KPIs and establish new indicators which would suit the already made changes in the company and still align with the company goals.

Establish SMART KPIs

Using SMART KPIs can ensure the high effectiveness of your KPI. Therefore, you have to ensure that your KPIs are

Specific – Your KPI must be clear, precise, and specific

Measurable– ensure that you can measure the periodic progress of the KPI towards the set goal. can you measure progress towards that goal?

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This article was first published on 3rd August 2022


Grace Christos Is a content creator with a proven track record of success in content marketing, online reputation management, sales strategy, and so much more.

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