Video:How to Use Key Performance Indicators

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Transcript:How to Use Key Performance Indicators

Hi I'm Jen D'Amore for About.com, and this video is all about how to use KPI's or Key Performance Indicators. According to About.com's management site guide, F. John Reh, Key performance indicators help an organization define and measure progress toward it's goals.

Key Performance Indicators Must:

• Reflect the organization's goals
• Be key to it's success
• Be quantifiable.

Key Performance Indicators Vary for Each Organization

Since KPIs reflect the "critical success factors" of an organization, they'll be different for each organization. For example, a KPI for a business may focus on the number of units sold. A theater may focus on the percentage of subscription renewal. A school may focus on graduation rates or national test score ranking.

To determine KPI's for your business or project, first determine the overall goals. This should originate from the organization's mission statement. Decide what to measure,and how to measure it. Be specific. If you're measuring sales increase, will you be measuring the number of units sold or amount of dollars? Are you subtracting returns? Lay out a specific formula so that everyone get's the same number when calculating.

Motivate Employees by Posting Key Performance Indicators

Post the KPIs for everyone in the company to see, and be motivated by. Knowing the target and their progress will encourage employees to meet and exceed their goals. Their success will fuel even greater progress. Check in to make sure everyone is focused on meeting or exceeding the KPIs. Regularly review progress in relation to the KPIs and adjust methods of operation when needed. Thanks for watching, to learn more visit us on the web at About.com.