8 Types of KPI’s and When to Use Them
Key Performance Indicators (KPI’s) and Metrics are a great way to monitor and measure your company performance and goal achievement. The big creative vision and brute determination we feel when we set goals can sometime wain, or become clouded and confused by the day-to-day operations. It’s hard to see if you are on track or not. For that, we want to watch some KPI’s or metrics to guide your progress. But, which ones, and are KPI’s and metrics the same? Technically they are different. Metrics are used to measure different aspects of business activity at a specific point in time. KPI’s specifically measure the performance of strategic objectives or goals of a company. So, all KPI’s are metrics, but not all metrics are KPI’s
So in order to monitor your company goal achievement we are going to want to pick some KPI’s that match your objectives. The 8 types of indicators that we will discuss are as follows:
Quantitative Indicators – Indicators that can be presented with a number. For example, keeping track of the total number of recurring clients is a quantitative indicator.
Qualitative Indicators – Indicators that can’t be presented as a number. For example, “improve the new assistant’s office skills so that she is capable of doing her job well”. This is not very measurable but more of a pass fail. Because of the loftiness, qualitative indicators may not be that appealing.
Leading Indicators – Leading indicators that can predict the outcome of a process. For example, measuring the number of applicants interviewed can predict whether you will be able to fill open positions or be ready for growth. Or, the number of sales inquiries can predict future revenue, and the amount of labor hours needed in the future.
Lagging Indicators – Lagging indicators point to the success or failure of a process after the fact. For example, net income measures the profitability of a company after the time period is over.
Input Indicators – Indicators that measure the amount of resources consumed during the generation of the outcome. For example, The total cost of training an employee.
Process Indicators – Indicators that represent the efficiency or the productivity of a process. For example, calculating a Quality score for your service in the field based on client feedback measures the effectiveness of your entire quality process. More specifically, if you have a service recovery process when serious complaints come in, then measuring the stick rate of customers that went through the recovery process is a good process indicator.
Output Indicators – Indicators that reflect the outcome or results of the process activities. For example, the number of houses cleaned this week.
Directional Indicators – Indicators specifying whether or not an organization is getting better. For example Measuring Percentage of sales growth from one time period to another indicates a directional change.
As you can see one KPI can meet more than one of these characteristics. So, start with identifying the goals that you want to achieve and then select the most appropriate KPI to measure and monitor the success of the objective.
