What do key performance indicators (KPIs) measure?

Key performance indicators (KPIs) are metrics that organizations use to evaluate their success in achieving key business objectives. They are specific, quantifiable measures that provide insight into the effectiveness and efficiency of various processes and strategies within the business. For example, KPIs can be directly linked to goals such as revenue growth, market share, customer acquisition, or operational efficiency.

When organizations define KPIs, they align them with their strategic goals, which allows decision-makers to assess whether they are on track to achieve those goals or whether adjustments are needed. This ensures that the focus remains on the aspects of the business that drive success, making KPIs critical tools for performance management.

While other aspects such as IT operations, product design, and customer satisfaction can certainly be measured and monitored, they are typically considered specific areas of performance rather than the broader concept of measuring overall success in achieving business objectives. Thus, the primary role of KPIs is to reflect how well the organization is performing against its strategic goals.