What are key performance indicators (KPIs)?

Key performance indicators (KPIs) are defined as measurable values that demonstrate how effectively a company is achieving its key business objectives. They are quantifiable metrics that help organizations assess their performance and progress toward specific goals. KPIs can vary significantly between different organizations and industries, as they are tailored to align with the strategic objectives of the business.

For example, a company might use KPIs such as sales growth, customer satisfaction scores, or net profit margin to gauge performance in critical areas. By monitoring these indicators, management can make informed decisions, identify areas that require improvement, and drive overall organizational success. The ability to measure and analyze KPIs allows businesses to track trends over time, optimize operations, and set performance targets based on data-driven insights.

This focus on measurement and outcomes distinguishes KPIs from other metrics that may not provide a direct correlation to achieving strategic objectives, emphasizing their role in performance management and organizational accountability.