How many KPIs do I need?

It always starts off with a simple request for KPIs or key performance indicators.   The challenge I often see is cutting through the noise and actually getting to the metrics that are truly “key”.  So what makes a KPI?  Here is my list:

  • It is connected to your strategic or tactical goals
  • It is unique (i.e. it is not strongly correlated or a subset of another KPI)
  • It is diverse (think about a balanced scorecard of indicators)
  • It can be calculated in a clear and consistent way (i.e. no debates about where the number comes from)
  • Your team “buys-into” the number
  • It has an owner who works toward improving it

For an a small team, I generally like no more than KPIs (ideally 1-2).  If you feel the need for tracking every possible operating number, then create a separate spreadsheet filled with metrics.  You can always graduate (or demote) metrics if you identify trends that are connected with your successes or failures.  For a company or larger operating group, I like to keep the KPIs to under 20.  More than that and they are a list of metrics rather than key performance indicators.  In the end I prefer to make the difficult decisions about what numbers are truly important and track those.  The rest are just numbers about your business.

So, how many KPIs are you using?

Author: Frank Days

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1 Comment

  1. For a while I had a to-do item called “Find KKPIs” meaning “Find Key Key Performance Indicators” from a mass of so-called KPIs, most of which were collinear with one another. It’s a bit like the people who say things like, “our top priority is quality, service and reliability” KPIs are there to keep you focused, not to distract you.

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