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What'S The Difference: Kpi Vs Metrics: Kpis Vs Metrics - Tips & Tricks To Performance Measures by Heyden Enochson
What'S The Difference: Kpi Vs Metrics: Kpis Vs Metrics - Tips & Tricks To Performance Measures by Heyden Enochson
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As strategic organizations, we all want to make sure we’re making the right
decisions based on data. And that’s great, but we need to be particularly
aware of the way we prioritize and measure this data, especially when it
comes to the measurement of our strategic plan.
Many organizations use the terms KPI (Key Performance Indicator) and
performance measures interchangeably. And while it’s forgivable, there is a
key difference between a KPI and a performance measure when it comes to
both the creation and implementation of your strategic plan.
Metrics also track and provide data on your organization’s standard business
processes but are not the most important metrics your organization needs to
measure, monitor, and perform against to make progress against your
strategic plan.
It’s easy to use the two terms interchangeably, but here is a good way to think
about it. Key Performance Indicators help define your strategy and clear
focus. Metrics are your “business as usual” measures that still add value to
your organization but aren’t the critical measure you need to achieve. Every
KPI is a metric, but not every metric is a KPI.
1) Define Your Measure – This sounds obvious, but every KPI must have a
clear expression of what you need to measure. The more descriptive your
performance measure, the better. You can categorize performance measures
into these categories:
Activity Measures –This measures activity and can include a
percentage, number, currency and activities, or processes. An example
of this measure would be the number of leads in your pipeline.
Outcome Measure – This measures progress against a defined
outcome, often expressed as a percentage increase, change, or results
from an outcome. An example of this would be % increase in revenue
compared to last year.
Project Measure – This measures the progress of a project, often
expressed as percent complete, a deliverable, activity, or process the
owner can influence. An example would be % complete to complete XX
strategic project.
Target Structure – These represent a numeric result against a date. A
perfect example would be $XXXM in revenue by the end date of a
strategic objective.
2) Define Your Target – Your target is the numeric value you’re setting out to
achieve. Targets need to match your measurement type and due date. If your
measure is a percentage, your target needs to be a percentage. If your
measure is a raw number, the target should be a raw number.
3) Outline the Data Source – Every KPI needs to have a clear data source.
Make sure you articulate where you are pulling your data from and what the
calculations are so everyone is on the same page.
4) Define an Owner and Tracking Frequency – As with any SMART goal, a
KPI needs to have a clear owner and defined tracking frequency. So, make
sure someone is accountable for pulling the data and updating performance
on a defined frequency. We recommend monthly in most cases.
A Checklist to Know You Got Your KPIs Right
We know KPIs and performance metrics can be downright hard. As an
evaluation to see if you got your Key Performance Indicators right, here’s a
quick punch list you can use to pressure test your list of KPIs to make sure
they’re strategic: