Key performance indicators should tell you, at a glance, whether the business is heading in the right direction. In practice, many companies track dozens of numbers and still feel unsure. The secret is choosing fewer, better measures.
Start with your goals
A KPI is only useful if it connects to something you’re trying to achieve. Begin with your three to five most important goals for the year, then ask: what single number would tell us we’re making progress?
Mix leading and lagging measures
Lagging measures, such as revenue or profit, tell you what already happened. Leading measures, such as sales meetings booked or proposals sent, help predict what will happen next. A good set of KPIs includes both, so you can act before results arrive.
Make each KPI clear
- Define it precisely. Write down exactly how it’s calculated and where the data comes from.
- Give it an owner. One person is responsible for tracking it and explaining changes.
- Set a target. A number without a target is just information.
- Review it regularly. Weekly or monthly, depending on how fast it changes.
Watch for unintended effects
People naturally focus on what’s measured. If you only measure speed, quality may suffer. Pair measures where needed, such as tickets closed alongside customer satisfaction, to keep the full picture in view.
If everything is a priority, nothing is. The same goes for metrics.
Keep the list short
For the leadership team, five to ten company-wide KPIs is usually enough. Teams can track more detailed measures, but they should all roll up to the company’s main goals.
Review once a year
As goals change, KPIs should too. At each annual planning session, check that every measure still earns its place, and retire the ones that no longer drive decisions.
