KPIs (Key Performance Indicators) That a Manager Needs to Know

Key Performance Indicators or KPIs are a measure or a metric system by which the performance of the employees are tracked. They are quantifiable measurements that help project managers to navigate their way through a project and lead the way for the company’s growth and success. Mostly, the KPIs are pre-determined. However, at times, companies get them wrong, either by trying to measure every aspect of someone’s performance, setting incorrect KPIs, or by adopting a set of KPIs that everyone else is using; instead of setting the one that suits their project.

All in all, KPI management needs a serious thought before being put into use.

Essential KPIs That Matter

These are the KPIs that every project manager needs to know. The project KPI framework is classified in different categories.

KPIs for Measuring Customers and Understanding Their Needs

  • Customer Profitability Score: This KPI allows you to understand the profit that individual customers bring to your business. These profits are calculated after deducting all the costs that were spent on marketing and advertising in the initial stages.
  • Customer Retention Rate: This helps in understanding the number of customers that your business has managed to retain for any product or service. It answers questions such as will the customers come back for more, are they loyal to your brand and if yes, then how strong is their loyalty, and so forth. 
  • Relative Market Share: With this metric, you can compare how big a share your business has in the same market as your competitors. Based on the results, necessary steps may be taken.
KPIs for Measuring Employees and Understanding Them
  • Employee Engagement Level: It measures how engaged employees are in a project and how their engagement levels reflect on the business goals. This KPI gives an idea of how much they are contributing and how their contribution helping or damaging the company.
  • Human Value Capital Added (HCVA): This metric calculates the financial value that is added by individual employees to a business.  
  • 360-degree Feedback Score: Feedback is an important exercise in any project. This KPI helps project managers keep a track on the same. They can evaluate how the other staffs rate their co-workers, as well as themselves.
  • Absenteeism Bradford Factor: With this, project managers can calculate the damage that the unauthorized absence of their staff members is causing to the business.

 KPIs for Measuring and Evaluating the Financial Performance

  • Net Profit: This KPI calculates the net profits that your business is making, by subtracting all expenses from the annual income.
  • Revenue Growth Rate: This helps project managers calculate the rate at which their company’s income is increasing.   
  • Operating Profit Margin: This is obtained when the operating income is divided by the revenue. This gives yet another reference with which one can measure a company’s profitability in an accurate manner.
  • Return on Investment (ROI):Every company invests a certain amount of money into its projects. This KPI gives a measure on how much revenue is generated against the invested money.

KPIs for Measuring the Internal Processes

  • Project Schedule Variance (PSV): It helps one keep a record of the projects are being completed on time, or not.
  • Delivery in full, on time (DIFOT) rate: With this KPI, project managers can keep a track of customer orders that have be delivered in full and on time, as compared to the total number of customer orders that are present.
  • Quality Index: This is an important KPI for every project as it evaluates the quality of all the services and goods that are being delivered to the customers, and if the quality matches up to their expectations or not.

What Next

It is not necessary that all these KPIs are needed in every project. Project managers need to select those that would fulfill their strategies to the maximum, address all the project targets and goals, and focus on project success criteria. So, it is time that they revise their list of KPIs and enlist the ones that would prove the most beneficial to them. 

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Uma Daga