6 Guidelines for Good KPIs

Quick Insight

A good KPI is one that helps you and your employees make good decisions. Check the bullets below for 6 guidelines for good KPIs.

Here are some guidelines for deciding which way to measure a KPI:

  • Does it focus on an aspect of a metric you most want?
  • Can the person responsible for the metric control or mostly control it?
  • Is it considered fair?
  • Is the measurement easy to understand? If it’s not but very important, can you educate your staff on it?
  • Is motivational?
  • Would it ever incent people to do the wrong thing for the company?

A good way to test how to measure a metric is to calculate the measurement for the past 12 to 24 months. Imagine it had been on your dashboard those past months. Did it provide clear feedback on the status of what you were trying to measure? Were the results easy to understand or require lots of explanation or context? Most importantly, would it have caused you to make good decisions?

I wish you find the right tools and achieve measurable results from proper KPI measurement techniques. I wish you well.

- Rob Stephens

Further Insight

CFO Perspective Resources

  • Video: Picking KPI Metrics - Picking metrics isn’t as easy as it seems. Poorly written metrics lead to confusion. They can also lead to actions that you didn’t intend to promote. In this video, I explain: Characteristics of a well-written KPI and the benefits of having someone assigned to each metric
  • Course: Key Performance Indicators (KPIs) and KPI Dashboards - KPIs are more than metrics. They’re the foundation of your most important decisions. KPIs define success to drive success. This course explains: how to choose metrics,  KPI dashboard tips, the process of implementing KPIs, and managing with KPIs.
  • Book: Key Performance Indicators (KPIs) and KPI Dashboards - With well-defined and well-managed KPIs, you can align your company’s vision from the ground up and maintain steady progress toward your goals. Get tips on dashboard best practices. Avoid common mistakes managers make with KPIs. I’ll guide you through the implementation process so you can start achieving your goals ASAP.

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