A measure of key business objectives of an organization. 

Key Performance Indicator (KPI) is a measure that determines how effectively, or ineffectively, organizations, projects or individuals achieve their key business objectives compared to their strategic objectives and targets. With well-defined KPIs, organizations can have a deeper understanding of their true performance levels.

Selecting the right KPIs is essential and largely depends on the industry type in question. Each department in an organization can have different KPIs to assess success based on specific targets and what’s most pressing for that department strategically.

In Practice, KPIs need to be monitored and reported continuously; any changes must be monitored in real-time. Dashboards are the best available sources of monitoring the Key Performance Indicators, as they visually illustrate the performance of an organization or a specific department often in an easy to understand and graphical manner.

Types of KPIs

KPIs are classified into 11 types: Quantitative, Qualitative, Input, Process, Leading, Lagging, Output, Practical, Directional, Actionable, and Financial Indicators.

Some of the examples of KPIs include, Project management KPIs, Human Resources Performance, Financial Performance, Operational and Supply Chain Performance, and IT Operations and Project Execution.

However, the downside is, there are more than 1000 KPIs and most organizations fail to choose the right one that most appropriately suits their business.

Choosing the right KPI is the key to healthy organizational performance. To choose the right KPIs for the organization, emphasize on the parameters or indicators that support the best of all possible outcomes.