Successful project management depends on having the right metrics to analyze the effort of your team. In a broader sense, the same concept also applies to your employees’ overall performance throughout the year. It’s an essential part of being able to recognize your top performers and reward them accordingly accurately.
Understanding the right Key Performance Indicators (KPIs) to track your staff is vital. So let’s take a look at the process as well as what attributes identify the most useful metrics when analyzing their performance. Running an efficient operation ultimately depends on it.
What is a Key Performance Indicator?
In its most abstract definition, a Key Performance Indicator is any significant metric illustrating progress towards a defined goal. If your organization is focused on continuous improvement for its operations, KPIs help keep you on track towards reaching that goal. Choosing the right KPIs is a vital part of successfully tracking your operational efficiency.
How do Businesses Use KPIs to Track Progress?
A business using KPIs sets a variety of performance goals, ultimately tracking progress towards achieving them. There are both leading indicators and lagging indicators used in this process. The former helps to indicate future success, while the latter naturally tracks how the organization met its goals in the past.
If this seems confusing, consider someone trying to lose weight. Their weight is a lagging indicator, while caloric intake (including calories consumed and burned during exercise) is a leading indicator. Benchmarking analyzes someone previously trying to lose weight to determine the ideal daily caloric intake to reach their desired weight.
What Attributes Are Shared by the Most Useful KPIs?
It’s essential to consider KPIs as a set. Thus, your team needs to identify the right collection of indicators to track employee performance. Make sure they share the following attributes:
- Illustrate clear evidence of progress towards a goal.
- Able to compare overall performance over time.
- Tracks efficiency, quality of work, project performance, and resource utilization.
- Includes a mix of both leading and lagging indicators.
Different measurements are used in KPIs to track inputs, outputs, processes, projects, and outcomes. For example, a software developer’s outputs might include lines of code written or tasks completed. These measurements help analyze progress towards the results, which are strategic impact measurements, which could be the number of completed projects or even the overall profitability of your organization.
Hopefully, this high-level overview of KPIs provides some insight into how they benefit a business.
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