What are key performance indicators (KPIs)?

Key performance indicators (KPIs) are defined as measurable values that demonstrate how effectively a company is achieving key business objectives. They provide a quantitative way to evaluate the success of an organization over time. By using KPIs, businesses can track performance against specific targets, thus enabling informed decision-making and strategy adjustments.

KPIs can be financial, such as revenue growth rate, or non-financial, like customer satisfaction scores. They help organizations gauge their progress in critical areas and identify trends that could either benefit or hinder their operations. By continuously monitoring KPIs, companies can remain agile and responsive to changes in the business environment, ensuring they are on track to meet their strategic goals.

This definition distinguishes KPIs from other measures, such as static goals set by stakeholders, which do not provide measurable data to evaluate performance, or qualitative assessments, which may rely on subjective interpretations. In contrast, KPIs emphasize quantifiable metrics that can clearly illustrate business effectiveness and drive progress toward strategic objectives.