What is a Key Performance Indicator (KPI)?

KPIs, or Key Performance Indicators, are strategic objectives that companies or individuals set to focus on a target and stay on track.

KPIs can be broken down into seven types: Inputs, Process, Outputs, Outcomes, Projects, Employees and Risk.

Although it is important to create a valuable outcome, you will need to create KPIs across the initiative to guarantee results and understand what has impact and what influences the outcome.

Input KPIs measure attributes (amount, type, quality) of resources consumed in processes that produce outputs.

For example if you're a IT consultancy, the input KPIs might be:

• Time.
• Use of Developers or Designers (i.e. more juniors than seniors).
• Technology Stack.

Process or activity KPIs measure the efficiency, quality, or consistency of specific processes used to produce a specific output.

They can also measure controls on that process, such as the tools/equipment used or process training.

For example, if you're an IT consultancy, the process KPIs might be:

• Following a certain process (i.e. sprints).
• Guaranteeing consistent results (i.e. reduced Q/A).
• Demonstrating enhanced communication (i.e. better dialog during stand-up).
  

Output KPIs are a result that measures how much work was done, if it was done well and are define by what is produced.

For example, if you're an IT consultancy, the output KPIs might be:

• The quality of the work you produce.
• The amount of test coverage that you have.

Outcome KPIs focus on accomplishments or impacts, and are classified as Intermediate Outcomes, such as customer brand awareness (a direct result of, say, marketing or communications outputs), or End Outcomes, such as customer retention or sales (that are driven by the increased brand awareness).

For example, if you're an IT consultancy, the outcome KPIs might be:

• The satisfaction your clients or customers have.
• The amount of maintenance that's required over time.
• The amount of down-time that the system has over time.

Project KPIs measure answers to questions about the status of deliverables and milestone progress related to important projects or initiatives.

For example, if you're an IT consultancy, the project KPIs might be:

• Hitting all milestones on time.
• Launching without bugs.
• Launching without reducing the scope.
• Delivering without incrementing resources.
• Completing the project on budget.
• Not inflating scope or allowing for feature creep.

Employee KPIs measure if an employee is performing well based on capacity, culture, learning, behavior, accomplishment and growth.

For example, if you're an IT consultancy, the employee KPIs might be:

• Learned a new language.
• Deepened expertise on a subject.
• Was always at 80% capacity or higher.
• Was never over capacity.
• Attended all meetings on time.
• Delivered all their projects without bugs.
• Required minimal oversight.

Risk KPIs measure factors associated with the economy, competition and financial health across all performance measure types.

For example, if you're an IT consultancy, the risk KPIs might be:

• Not losing resources mid project.
• Not losing clients due to poor performance.
• Staffing contractors instead of full time employees.
• Maintaining salaries during hardship.
• Staying on top and adapting to all of the latest announcements and technologies.
• Maintaining a status of expertise in the industry.

Search our blog to find educational content on project management, design, development and strategy.