How to Set the Right Key Performance Indicators (KPIs) for Your Business

Setting the right Key Performance Indicators (KPIs) for your business can make all the difference in driving your business success.

KPIs are a powerful tool, but many businesses struggle to use them effectively because they are unclear about where to start or they have too many KPIs to track.

To help you with your KPIs, here are four key principles to help you set the right KPIs for your business quickly and easily.

1. What Gets Measured Gets Managed

Peter Drucker, the father of management, famously said, “What gets measured, gets managed.” This means that whatever you focus on, you will manage better. Therefore, you need to be selective about the things that you measure to ensure you focus on the right things. By measuring the right things, you and your team members will be able to direct your efforts towards the most important areas that will drive your business.

2. Less is More

When it comes to KPIs, less is more. If you have too many KPIs, you’ll send mixed messages to your team members, who will struggle to prioritise their efforts. Instead, focus on one or two key KPIs that make a difference.  Often these will need to be balanced with one another. For example, you might have KPIs that measure:

  • Quality and quantity;
  • Speed and accuracy
  • Sales and margin.

The 80/20 rule applies here as well.  If you can focus on the 20% that will shift the needle, the other 80% will generally be taken care of.

3. Use KPIs to Drive Your Business

For most businesses, there are key functions that need to happen well to build a profitable and sustainable business.  It starts with marketing, then sales, then you’ve go to deliver your product or service.  Finance function then needs to make sure the money’s collected and if you do all that well, then you’ll get repeat business.

So to drive your business, you need to focus on the key numbers that will drive each of these functions. For example, in marketing, the KPI normally is around leads, such as the number of leads, the size of your social following, or the growth in your database. When it comes to sales, the KPI could be your conversion rate, the average dollar sale, or % of target. For operations, the KPIs are  usually about throughput, quality, and avoiding mistakes. In finance, it’s margins, expense control and collecting the money.

The key is, whatever the function, make sure you measure the things that will actually drive the results and outcomes you are after.

4. How to Set KPIs for Staff Members

To set Key Performance Indicators for staff, simply follow the following 4 steps:

  1. Make sure you have a clear job/position description that clearly outlines the responsibilities of the role.
  2. Group the role into two, three, or four key functions that link back to the key areas that drive your business.
  3. For each of these functions, ask the question, “What does great look like?” This will help you to identify the key result or outcome that you are after.
  4. Determine what /how you can measure this outcome. This will become your Key Performance Indicators.


Setting the right KPIs for your business can be challenging, but following these four key principles will help you to set the right KPIs quickly and easily. By selecting the right focus, keeping it simple, using KPIs to drive your business, and following the right steps, you’ll be well on your way to achieving your business goals.

Remember, KPIs are a powerful tool, so use them wisely and see the impact they can have on your business success.



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Free Guide:
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