Key performance indicators, or KPIs, are critical for business success — especially for Accounting and Finance teams. They are a quantifiable measurement used to determine how your company progresses to meet business goals and can help you map organizational alignment. They identify where you need to allocate more resources and attention, and they empower you with data for informed decision-making.
KPIs are the foundation of organizational and strategic improvement. Every department, team and individual should have clear KPIs.
But goalsetting is only one part of your business success equation. Continuous feedback is the other.
KPIs and Employee Performance
When it comes to individual employees, key performance indicators are an essential practice for evaluating progress, setbacks and outcomes. KPIs must be specific, quantifiable and appropriate for measuring performance over a period of time.
When done correctly, KPIs measure SMART goals:
- Specific: Focus on executing a specific task or behavior with clearly defined expectations.
- Measurable: Use a numeric value to determine how the goal will be tracked and met.
- Achievable: Set realistic and reasonable targets and identify resources needed.
- Relevant: Align to business goals through short- and long-term activity.
- Time-bound: Assign a timeframe for completion.
No one should create SMART goals or KPIs in a vacuum. Team leads should work with direct reports to ensure alignment of individual goals to team and department objectives that support organizational and strategic goals.
KPIs shouldn’t be set at the beginning of the year and only revisited during quarterly and annual evaluations. They require regular review and continuous feedback. They should be part of your weekly and monthly conversations, because they are not only a fantastic tool for performance assessment, but also for holding accountability and giving recognition. Regular performance feedback loops quickly identify when targets aren’t met and provide opportunities to recognize incremental wins.
KPIs in a Performance Culture
One of the best ways to raise employee engagement and highlight corporate values is by recognizing outstanding performance and exceptional work. When individuals understand how they contribute to their team, department and organizational goals, they have more buy-in for business success. They also feel greater pride in their work and are driven to achieve excellence. People like to be part of a winning team and likewise, appreciate a corporate culture that emphasizes personal achievement and results.
Using KPIs to celebrate individual and team success builds morale and boosts engagement which can directly impact company growth.
Looking for talent to build a winning team? Alliance Resource Group can help.