KPI’s or, “Key Performance Indicators,” are the beating heart of an organization, giving leaders the tools to ensure team members are on track, or where they need support for overall improvement. With that being said, there needs to be some thought and reasoning around these “goals” and not simply tracking for the sake of tracking: they must have a greater meaning aligned with the all-encompassing goals of the business.
First, you need to decide what you measure by determining what will drive your business forward whether that be number of sales calls, or contracts signed.
Next, turn those measurements into metrics by combing two or more, for example, number of sales calls per week.
The KPI is derived from applying that metric to your specific industry and organization. KPI’s often take shape in the form of percentages (percent increase, decrease, % of target, etc) or ratio’s.
Measurements⇒ metrics ⇒ KPI’s
Ideally, individuals will have 5-6 KPI’s and this can vary from person to person. By utilizing a KPI system, a manager is better able to coach an individual on specific areas needing improvement and identify excellence within their team in critical areas.
Source article: http://blog.adaptiveinsights.com/business-intelligence/kpi-important/