What Are Key Performance Indicators? (2024)

Key performance indicators, also known as KPIs, are tools widely used by companies and individuals to evaluate performance and track progress over time. Organisations use KPIs to help employees focus on attaining a common work goal. KPIs also help businesses track time, tasks, and budgets to ensure they achieve their targets. You can also use personal KPIs to accomplish your own professional goals. If you are looking for a new career or are about to ask for a job promotion, it's a good idea to explore how you can use KPIs to secure your next job or climb the career ladder.

So, what are key performance indicators, and how can you use them to your benefit? If you are still confused about what a KPI is, read on, and we’ll discuss in detail what they are with examples, how they work, why they are essential, and how you can demonstrate them in your CV.

What Are Key Performance Indicators?

Key performance indicators are types of performance measurements that track how an organisation or an individual progresses over time. You can think of them like a compass that shows whether you’re on the right path to achieving your strategic goals.

To understand this better, imagine for a second that you’re a bricklayer. The number of bricks you lay, the time it takes you to lay a specific number of bricks, and the number of walls you can build in a week are examples of KPIs. These measurements can be assessed over time to evaluate if you are improving at your job or not. In other words, KPIs are smaller objectives that are part of a larger picture.

The reason KPIs work is because they are quantifiable, meaning their purpose is to set you measurable goals to work towards. These goals can be monitored and assessed throughout the year so that you and your employer can identify areas to improve on. Maybe you are thinking about asking for a pay rise. If you can present a strong business case that includes your achievements and strong performance, you'll be more likely to hear a 'yes' from your boss. You can even set your own KPIs to help you measure your progress, make necessary adjustments, and recognise patterns. An effective KPI follows the SMART technique, where each KPI is:

• Specific – what must be achieved, how will it be done, and who will be involved?
• Measurable – its progress must be quantified and measured frequently.
• Achievable & Assignable – is it realistic and seen as a fair indicator? Who is responsible?
• Relevant – why is it important and relevant to the business objective?
• Time-bound – it must have a start date and target completion date.

KPI Examples

Every business measures its success in distinctive ways. The way KPIs are used will vary depending on the industry. Let's have a look at a few different sectors and see what KPIs they utilise:

Digital Marketing KPI Examples

• ROI – this acronym stands for return on investment and is the amount of revenue generated by marketing activities. This allows professionals in marketing jobs to identify how effective their work is.
• SEO rank – how a business appears in search engine results for specific keywords. The better it ranks, the more traffic it gets, increasing revenue.

Sales and Finance KPI Examples

• business indexes – an information source that can allow companies to observe trends over time. It includes a base value that can be compared to previous periods to assess performance.
• net profit – the amount of money a company retains after paying taxes, salaries, and other expenses.

Retail KPI Examples

• customer retention – a company's ability to turn customers into repeat buyers. This KPI measures the rate at which customers stay with a business in any given amount of time. This is an important KPI as it is more cost-effective for companies to retain a customer than find a new one.
• conversion rate – this measures the percentage of visitors to a store that make a purchase. The ultimate goal of a business and employees working in retail jobs is to convert sales, assessing the effectiveness of marketing or operational efforts.

Human Resources KPI Examples

• employee turnover – the average time an employee stays in a company, indicating employment stability. A high turnover rate can cost a company money in lost talent and may reveal an unhealthy work environment or low salaries.
• cost per hire - the amount of money a company invests in hiring a new employee. This may involve expenses related to training, advertising, and the cost of the recruiter's time.

Why are KPIs Important?

At this point, if someone were to ask you 'What are key performance indicators?' you should be able to give a confident answer. Now that you understand key performance indicators, we can discuss why they are important. KPIs can bring various benefits to both the company and employee, such as:

• increased employee morale - tracking KPIs involves recognising employees' hard work and allows them to feel acknowledged and appreciated. Employees are more likely to feel motivated and push themselves to complete a job well done.
• supporting business objectives – KPIs ensure that performance is measured with intent and in relation to the larger company objectives and higher purpose. When KPIs are used effectively and well communicated across an organisation, the overall goals are always a priority.
• nurturing personal growth – KPIs enable employees to monitor their performance at any time and the performance of their team members. They are more likely to achieve their goals when they see their continued improvement over time. Team collaboration allows for transparency which simplifies communication and increases accountability.

How Are Key Performance Indicators Measured?

Once a KPI has been defined, methods of assessing and measuring performance regularly need to be implemented. Using a system that everyone has access to is essential to ensure transparency. You can use some of these tools to track your own personal KPIs. There are various ways to do this, including:

• distributing customer feedback surveys
• CRM systems or spreadsheets that are updated daily
• business analytics software
• employee evaluations
• productivity records
• project management systems
• tracking metrics such as business, sales, and employee performance

Understanding your KPIs within a company and how you are progressing can help you concentrate on essential tasks and can enable you to focus on advancing your career.

How Can You Use KPIs in Your CV?

By now, you should feel quite excited and confident to use your knowledge of KPIs. But where do you go from here? If you are job searching, you'll want to take this information and use it to optimise your CV. You can use your KPIs to highlight your achievements and make you more attractive to potential employers.

In your CV, you can write down KPI results from a previous job or your own personal KPIs you've recorded to measure your performance. Remember, they should be relevant to the position you are applying for. Here are some excellent examples of demonstrating your KPIs in your CV:

• increased company sales revenue by 23%
• attained 38 new clients last year
• decreased energy costs by 62%
• increased customer retention by 28%

Are You Using KPIs in Your Career? Begin Your Search for Jobs Today on Monster

We hope that we've answered your question of what are key performance indicators? It's time to use your KPIs to take a step up the career ladder. You can begin your job hunt by creating your free profile on Monster. You'll receive job alerts regularly, and once you've uploaded your CV, we'll match you with roles that fit your experience and goals.