How many KPIs do I need?
It always starts off with a simple request for KPIs or key performance indicators. The challenge I often see is cutting through the noise and actually getting to the metrics that are truly “key”. So what makes a KPI? Here is my list:
- It is connected to your strategic or tactical goals
- It is unique (i.e. it is not strongly correlated or a subset of another KPI)
- It is diverse (think about a balanced scorecard of indicators)
- It can be calculated in a clear and consistent way (i.e. no debates about where the number comes from)
- Your team “buys-into” the number
- It has an owner who works toward improving it
For an a small team, I generally like no more than KPIs (ideally 1-2). If you feel the need for tracking every possible operating number, then create a separate spreadsheet filled with metrics. You can always graduate (or demote) metrics if you identify trends that are connected with your successes or failures. For a company or larger operating group, I like to keep the KPIs to under 20. More than that and they are a list of metrics rather than key performance indicators. In the end I prefer to make the difficult decisions about what numbers are truly important and track those. The rest are just numbers about your business.
So, how many KPIs are you using?
