If you’re ready to meet your organizational objectives, you need the proper measures in place. A KPI report is a great place to start.
Key performance indicators (KPIs) play a role in nearly every organization. Any successful company wants to be able to meet their organizational objectives successfully—but that can be easier said than done.
Not only do you have to select the KPIs that are appropriate for your industry (i.e., municipal KPIs aren’t going to work in the financial sector), you also have to figure out how to report on them appropriately and accurately. This can be a tough step, but it’s an undeniably important one.
I’ve taken a sample KPI report—which is also commonly referred to as a KPI template or measure template—and described every element you need to implement at your own organization. But before we go that far, you first have to understand what a KPI report is, and why KPIs are critical to your company’s success.
Why Are KPIs Important?
In order to understand why KPIs are important (and thus, be able to create a successful report) you need to have a clear definition of what a KPI is.
Every organization has objectives, or high-level company goals. Key performance indicators (KPIs)—also called “strategic measures”—are both actions and tools of measurement used to monitor the progress toward achieving these objectives.
In its simplest form, a KPI is a measurement device that helps you understand how your organization is doing in regard to its goals. Effective KPIs are actionable, crucial, and easily communicated throughout the organization.
So why are KPIs important? Because they act as a proxy between your organization and the goals you’re looking to achieve.
What Is A KPI Report?
This is simply a “strategic tracking method” that will help your organization better define and track the numbers you want to hit. Let’s say, for example, that your company wants to track “Sales By Region,” (which happens to be one of 18 very important KPIs to track)—you’d need to know what it includes, what it doesn’t include, who is in charge of making sure the information is correct, and more. If you don’t have all this information organized, you’d be fighting an uphill battle.
Additionally, you have to track an adequate amount of information to make the KPI effective. If you simply state that you want to track Sales By Region, but then don’t assign an owner, don’t analyze regional sales objectives, and don’t present the findings on a regular basis, you shouldn’t count on reaching your goals anytime soon.
Sample KPI Report
Instead of simply describing what a good key performance indicator template should look like, I think it’s better to show you. So here are two KPI examples (designated below as “measures”)—“Percent of key positions filled with qualified individuals,” and “Number of engagements in conjunction or coordinated with international partners.” Let’s walk through each category, step by step, so you can create a similar template for yourself. For the sake of the descriptions below, let’s look at the far right-hand column.
Objective: An objective, as previously stated, is a high-level company goal. The reason you’re tracking a KPI in the first place is to ensure that this particular goal is met. It should be stated in your KPI report so you keep in mind why you’re tracking a particular KPI or what you’re trying to improve in regard to your strategy. So one of the objectives listed here is, “Lead future global cooperation.”
Measure: You can think of a “measure” and a “KPI” as one and the same. The KPI in our example—“number of engagements in conjunction or coordinated with international partners”—is how this hypothetical company plans on “leading future global cooperation.” Remember, this step needs to be actionable, crucial, and easily communicated across the organization.
Rationale/Definition: This section should explain the why factor. When a KPI that lines up with a particular objective has been decided upon, the team assigned and the KPI owner should be able to describe (in detail) why they made the choice they did. In our example, the team chose to measure the number of engagements in conjunction or coordination with international partners because they felt strongly that they should “work jointly with international partners to demonstrate capability and maintain influence to continue to lead in the future.”
Frequency: How often (so, at what frequency) should the KPI be measured? In our example, the owner and team decided it should be re-examined on an annual basis. Other KPIs could be measured monthly, quarterly, or bi-annually, depending on the type and the importance.
Source/Formula: This section provides insight on where you can find the data source that is used to monitor and measure this KPI. In our example, that information can be found at the international affairs office. There is no formula that needs to be applied to the data source involved in this example, but if there was, it would appear in this section as well.
Graph: With every KPI, you have to determine how you’re going to share the information that you collect. For example, is it more important to see target, actual or your year-to-date performance, or a benchmark? Decide what is most valuable and create a meaningful chart with that information. Make sure you’re consistent and use the same chart each month, quarter, or year, so the team can track performance over time. Our example has been measured by the “number of engagements with international partners” measured each fiscal year.
Owner Comments: To be successful, every KPI needs an “owner” who is tasked with tracking it. In this section, the owner can leave comments about any additionally qualitative information they need. Here, the owner noted that they need to further leverage their partnership with the State Department for better KPI results.
This may seem like a lengthy process, but to be successful with organizational strategy, you have to take the necessary steps and get S.M.A.R.T with your KPI tracking. Take my word for it—the extra effort will pay off once you’ve successfully achieved your company goals.