Definition of Key Performance Indicator (KPI)
A measurable value that demonstrates how effectively a company is achieving its key business objectives.
Explanation of Key Performance Indicator (KPI)
A Key Performance Indicator (KPI) is a measurable value that indicates how effectively an organization is achieving its key business objectives. KPIs are used to evaluate success in reaching targets, identify areas for improvement, and guide decision-making. For example, a company might use KPIs such as revenue growth, customer acquisition cost, and employee productivity to assess its performance. KPIs can be financial or non-financial and are tailored to specific goals and industries. They provide a clear and quantifiable way to track progress and measure outcomes. By monitoring KPIs, organizations can stay focused on their strategic objectives, make informed decisions, and drive continuous improvement. Effective KPIs are specific, measurable, achievable, relevant, and time-bound (SMART). The goal of using KPIs is to provide actionable insights that help organizations achieve their objectives and improve overall performance.