Why are KPI’s important?



The growth and ultimate success of your company will be determined by the consistency of results. And those results can only be achieved if your team consistently meets the desired goals and targets.


A KPI (key performance indicator) is a quantifiable measure that can be used to determine how well company goals are being met. Managers can set out a number of KPI’s for a project that they can use to identify how well individual employees are performing.


From reviewing employee performances to tracking company progress, there are a number of reasons why KPI’s are an important factor in assisting your company’s growth.


You Can Measure Your Targets

Though they may be easily confused, KPI’s are not company goals or targets themselves, but they’re a measurement of goals and targets. This is arguably the most important reason why KPI’s should be used and the most significant usage of a KPI.


Create an Atmosphere of Learning

Being able to measure targets using KPI’s can create an educative atmosphere within your company. According to Root Cause, the data that is generated by measuring KPI’s leads to important conversations within the workplace.


When you notice an unfavorable reading on a KPI, you have the chance to talk to the individual or team involved with that specific KPI. This a great opportunity for you to teach the employees how to do things differently and perform better in order to reach set targets.

Additionally, you can analyze whether the set KPI’s are an effective measurement, and conversely, make necessary modifications if the employee feels that the targets are unrealistic to meet.


Receive Important Information

KPI’s provide an immediate snapshot of the overall performance of your company. When you’re in a highly competitive market, that information can be a crucial part of your attempts to “beat” your competition.


Encourage Accountability

Without KPI’s revealing vital statistics about performance, you run the risk of making inaccurate decisions about employees during reviews. You may assume that an employee is performing poorly because he/she has punctuality issues or a perceived lack of company engagement, but you have no quantifiable proof. A KPI may reveal that your assessment is incorrect and the perceived “poor performer” may have some favorable stats and delivers good results.


On the contrary, poorly performing employees can hardly argue their case if their KPI stats show unfavorable readings. Essentially, KPI’s encourage accountability for both employees (if they’re not performing) and employers (if KPI’s are deemed unreachable).


Boost Morale

Employee motivation and job satisfaction are extremely important in order to improve company performance and culture. It can often be difficult to motivate your team when set targets can only be achieved once a quarter or once a year.


It can be quite rewarding and motivating for employees to receive positive reports for meeting certain KPI’s in the interim. The results are often instant. It creates a sense of purpose and keeps them focused on meeting their goals.


Although KPI’s are important for reaching company goals (and inevitably growth) by allowing you to make systematic, timely adjustments, you must ensure that those goals have the potential for you to create actionable KPI’s based on them.


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