Examples of good and bad KPIs
Example of bad KPI:
- Title of KPI: Sales increase
- Define: The change in sales volume from one month to another
- Measure: Sales per region and total sales
- Target: Increase each month
Why is it a bad example of KPI ? Because it is absolutely not clear, this synthesis doesn’t allow to answer the following question :
Do we consider an increase in sales in monetary value or in units sold ? If we consider a value, is it at the catalog price or at the real sales price ?
Products returned by customers are taken into account ? If yes how do they adjust the KPI ?
What is the targeted increase value ? (in percentage, value…) ?
Example of good KPI:
- Title of KPI: HR turnover
- Define: The total number of resigning employees, whatever the reason, more the number of employees dismissed for performance reason, and this total divided by the number of employees at the beginning of the year. The employees lost because of restructuring plans are not taken into account.
- Measure: The registering of each employee in the HR information system is done by the HR department. The reason and the date (of the last appointment with HR) of the separation is inscribed for each employee that does not belong to the organization anymore. Each month, or on demand, the analysis department make a query in this IS and provides to the head of departments reports about HR turnover. The graphs are posted on the Intranet by the analysis department.
- Target: Reduce the HR turnover by 5% per year