Understanding KPIs and Key Metrics

Understanding KPIs
and Key Metrics

What are Key Performance Indicators (KPIs)?
What are the things you can count on
your doctor doing every time you visit?





He’ll take your temperature,
Your blood pressure,
Your pulse rate, and
Your height / weight.

These four items are the doctor’s
Key Performance Indicators (KPIs)
he utilizes to get a quick picture of
your overall health.
Copyright© 2012 By Boyer Management Group. All Rights Reserved.
www.boyermanagment.com

2

KPIs are exactly the same thing… the four
to six key measurements that tell you the
status of the health of your organization
at a glance.

Each KPI needs to be defined in terms
of three elements:
 What specifically gets measured,
 The unit of measurement, and
 The period of measurement.

3

Let’s take a look at a KPI example: Revenues

What specifically gets measured?
 Gross Revenues?
 Revenue versus Budget?
 Average Revenue per Customer?

What is the unit of measurement?
 Gross Dollars?
 Percent of?

Over what period of time shall it be measured?

4

Each KPI needs an associated
benchmark:
 Think of a benchmark as an
acceptable measurement
of the KPI.
 Could be stated as a single
measurement or a range.

Example: a good benchmark for average revenue
per customer might be set at 100% to 105% of the
objective for this KPI.

5

KPIs are supported by a number of measurements called
key metrics…
Avg. Revenue per Customer – examples of key metrics:
 Sales by product line.
 Sales by market.
 Sales by customer category.

You’d examine each one to uncover
the cause of your current sales results.
Just like KPIs, each key metric will have
its own period and unit of measurement,
plus a benchmark.

6

Putting KPIs &
Key Metrics to Work

Putting KPIs & Key Metrics to Work
Q: When are KPIs (and key metrics)
the most valuable to your
organization?
A: When they help you direct and
measure its forward progress.
1. Choose the four to six KPIs that are
most important for your
organization.
2. You’ll need a timely tracking and
reporting mechanism.

8

KPIs and key metrics are most helpful when they are put to
work to help you steer your organization:
3. Track and evaluate the trends.
4. Determine how, when, and to
whom you will communicate
the KPIs.


9

KPIs and key metrics are most helpful when they are put
to work to help you steer your organization:
5. The efforts and output of
every business unit directly
and/or indirectly impacts
one or more KPIs through
its operations.
6. Each business unit should
identify the KPIs it should
track, and four to six key
metrics that underlie each
KPI.

10

KPIs and key metrics are most helpful when they are put
to work to help you steer your organization:
7. Institutionalize applicable KPIs at both an enterprise and
business unit level, along with a plan to manage to and
by the KPIs.
8. Create a self-directed staff
that utilizes applicable KPIs
and key metrics to make
decisions and direct each
person’s day-to-day
activities.

11

To learn more about putting KPIs
and Key Metrics to work in your
organization, please visit
www.boyermanagmenet.com

Understanding KPIs and Key Metrics

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