What are key performance indicators (KPIs)?

Key performance indicators (KPIs) are measurable values that demonstrate how effectively a company is achieving its key business objectives. Organizations use KPIs at multiple levels to evaluate their success in reaching targets. By providing quantifiable metrics, KPIs enable businesses to track performance over time, make informed decisions, and identify areas for improvement. This makes them crucial for strategic planning, operational efficiency, and overall performance management.

In contrast, generic metrics that lack specific relevance do not provide meaningful insights or direction for an organization. Similarly, obsolete measures of productivity fail to reflect current practices or dynamics within the workforce, which can lead to misguided strategies. Finally, qualitative assessments of consumer satisfaction capture subjective impressions rather than objective measurements and do not lend themselves to numerical evaluation, which is essential for KPIs.