What is KPI and why it is important?
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What is KPI and why it is important?

In order to grow, every company needs to set measurable operational and strategic goals, which are then included in its strategy and plans. To make sure that the goals are being met and that the direction in which the company is going is in line with its set strategy, most businesses use KPIs Key Performance Indicators to measure the progress.

KPIs allow management to see clearly where the company is at any given moment and whether a particular activity in which it engages is successful. Because KPIs can be used to monitor progress in real time and towards many different goals, they allow management to make quick decisions, including prioritization of certain processes and adjustments of in the company's short- and long-term strategy.

What is KPI?

With the use of KPIs, companies can easily reduce complex sets of information about a company and its operational results to easily understandable and measurable sets of key data. This makes the decision process much easier and allows to more quickly understand where the company is heading and whether performance is at a level required to achieve the pre-set target.

According to Peter Drucker, one of the fathers of modern management, if something can be measured it can also be managed, this means that anything that a company measures is in its control. Of course, as the name suggests, only key indicators should be taken into account when setting goals - measuring of which gives immediate information about the progress in the company.

Key Performance Indicators

Naturally, KPIs differ between companies, depending on the size of a company, the market in which it operates and other niche-specific features. One common thing is that they should always be connected with strategic and operational goals and set within a specific time frame.

KPIs are a great tool, managers can use to properly keep track of processes within the company, its performance and results. They help define and achieve operational and strategic goals. Understanding which elements of company's activity are under performing allows to react and enhance strategy quickly and effectively.
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