In corporate speak, you often hear people asking about the KPIs you will achieve with your marketing, your project management, your so on and so on. But, it can be difficult to understand when to use a KPI to the greatest benefit for you and your customers.

What Is a KPI?

If you want a more in depth look at how to use KPIs, read What is a KPI?

Simply put, a KPI is a numerical goal or standard that you use to determine how successful your activities are. A Key Performance Indicator (KPI) can be used at a company level, department level or even individual level (although these are more appropriately called goals).

A KPI can be useful for communicating desired outcomes and for tracking goals and activities.

When do KPIs Matter?

If a KPI distracts from serving customers and employees or gives you a false sense of security, the KPI should not matter so much.

Like micro-goals for setting personal activities, a good KPI focuses on larger goals for a business or team of people and measures the activities that they do. They should not cover everything you can think of, just the things that are key parts of your business maintenance and growth. So, setting numbers of phone calls a phone center operator should make each week is a key number. On the other hand, tracking bathroom breaks among employees is often an indicator that management has problems, not that a company is being incredibly successful.

A good KPI also focuses on performance. If you are not doing the activities necessary for growing your business, you do not have a KPI, you have a hope and a wish. Or, maybe even a goal.

Finally, a KPI has to be trackable, an indicator of success or need for improvement.

When a KPI is focused on the key activities which make your business grow and is based on controllable activities with a trackable system of measurement, the KPI will benefit your business.

The final thing you need to think about is the human cost of your KPIs. The human who enjoys being treated like a computer is a rare specimen. Most people like to feel like they are in control of their life and their labor. Take away that feeling with too stringent tracking and intense or intrusive KPIs and the people you want to lead to greater successes will often rebel against you.