A key performance indicator is a type of performance measurement that demonstrates how effectively a company or person is achieving key business objectives. A KPI evaluates the success of an organization or of a particular activity in which it engages. Therefore, they help determine a company’s strategic, financial, and operational achievements, especially compared to those of other businesses within the same sector. High-level KPI may focus on the overall performance of the business, while a low-level KPI may focus on processes across departments like sales, marketing, HR, or support. In addition, KPIs may focus on the performance of individuals, projects, campaigns, processes, tools or even machines.
Above aside, KPIs unify employees to work towards a common goal. Employee engagement is something that most companies struggle with, and it can directly impact your sales and customers. However KPIs can help with this as well. These are a helpful mechanism to measure performance, which has a direct tie to employee engagement. In fact, organizations with an engaged workforce see higher customer engagement, productivity, and 21% higher profitability, according to Statista.
Choosing the right KPIs relies upon a good understanding of what is important to the organization. To develop a strategy for formulating KPIs, start with the basics. Firstly you should understand what your organizational objectives are. Then, analyze how you plan to achieve them, and finally, discover who can act on the information.
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