Key performance indicators (KPI) are used by businesses to measure progress. After an organization analyzes its mission, identifies stakeholders and defines its goals, it often develops KPIs to monitor these goals. These measurements are often agreed to by management. KPIs vary from business to business, but they all are targeted at achieving the organization's goals. A few KPIs canfocus stakeholders' attention on achieving the organization's mission. Each KPI can have three or four subsections that combine to contribute to the overall measurement of success.

Step 1.

Set your KPI specifically for your business. If you are responsible for managing a school, for example, you could set your KPIs to target a graduation rate or benchmark standardized test scores. By comparing your operation to others, you can more easily determine what your goal should be. Set your KPI to the number of phone calls answered per minute, for example, if you run a customer service department. Target your KPI to the number of clients assisted per year if you run a social service organization, as another example.

Step 2.

Craft your KPIs to reflect your organization's goals. These goals must be key to the success of your business and they must be measurable. For example, specify how many customers you want to generate in a specific amount of time. If your goal is to increase sales, define whether you want to measure that in units sold, or revenue generated, for example. Monitor and change your KPI targets as you see fit, as you get closer to achieving your goals.

Step 3.

Measure your KPIs against those of other organizations in your industry. For example, if your goal is to attain the most revenue in your industry, you may want to set your target to higher than what your competition has reported. Make sure your KPIs can be understood by every stakeholder in your group. A simple and specific KPI, such as reduce employee turnover by 5 percent per year, can be easily understood.

Step 4.

Use the same type of performance indicator from year to year, though, as mentioned in Step 2, you can adjust your specific target in each KPI. By using the same KPIs, you can more closely understand your organization's ability to achieve the specific goals. You will also be able to adjust your goals to make them realistic. Also make sure your KPIs reflect critical success factors.