What is KPI? Learn about KPIs

For many businesses, the term KPI is extremely familiar and important in the development of employees and the company. However, for new employees or even working for years, they still do not understand what KPI is, what role does KPI play for their jobs, will KPI help increase productivity and work efficiency? Let's find out what the term KPI is in the article below.

1. What is KPI

KPI is an acronym for Key Performance Indicator , a tool to evaluate and determine the effectiveness achieved by the business compared to the business goals set out. KPI was first used in the US in 1980 then spread to many countries around the world, used for businesses, organizations and became an important tool to evaluate employee performance and efficiency. achieved by each business.

KPI is calculated, measured by day, monthly, quarterly or yearly based on the position of employees working or the business cycle of each business.

2. The meaning of KPI with the business

1. KPI shows the effectiveness of a set goal or goal.
2. When the results have been implemented, it will be easy to continue the orientation.
3. Help the leaders grasp the effectiveness of the goals set out for each employee, group or company.
4. KPI indicators will evaluate work efficiency more specifically, more clearly create motivation for employees.

3. How to have an effective KPI?

To get an effective KPI, we first need to determine how the KPI. There are several important issues in determining KPI:

1. What goals are individuals or businesses?
2. The importance of that goal.
3. The performance is checked, calculated like?
4. What ways to boost job performance?
5. Who is the target assigned to, which group?
6. How to check the results for each target stage?
7. How to check that the goal is reached?

To evaluate the effectiveness of KPIs, businesses often use the SMART model. The SMART model is abbreviated for many of the following factors:

1. Specific: Specific goals set out.
2. Measure: There is a need to have a clear understanding of the achievement of the target.
3. Attainable: Are goals achieved or not?
4. Relevant: Is the goal of each group consistent with the overall goal of the business?
5. Time-frame: Time to achieve goals.

Thus, KPI needs to be expressed by visual numbers, specific, visible and calculated.

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