What Is a KPI and How Can It Affect Your Career?

In the business world, there's an acronym for just about everything. In fact, there are so many acronyms that you might feel overwhelmed. One acronym you might not know of is KPI. Used to measure your progress towards a certain goal, KPI is an important term. It stands for the key performance indicator, but KPI means much more for your career.

What Exactly Does KPI Measure?

In short, KPI measures your progress towards any goal. It could be a complex, long-term goal like an annual sales amount. Or, it might be something as simple as reducing the amount of time it takes to make a product. When it comes to the goal, there are very few limitations.

Without a KPI, employers can't measure how their employees are working towards a target. They might have an idea, but there is no visualization. By using a KPI, the company can measure your efforts and help you see a path to your results.

For a KPI to be effective, the measurements need to be quantifiable. The goal must take place over a set period of time and not have an ambiguous timeline. While this might sound simple, it's not always easy to use numbers to measure your efforts or goals.

Examples of KPIs

The best way to understand KPIs is to look at some examples. Yes, a KPI is any number that tracks or measures your success or growth. But what exactly is that?

For someone who plays basketball, a KPI could be their average points per game and their assists per game. You can look at those values over time and see whether they increase or decrease. By analyzing the numbers, it's possible to evaluate the player's development and value as an athlete.

The same is true in the workplace, although the statistics vary. If you work in a sales field, you might have a KPI to increase sales revenue by 12%. In the marketing field, a common KPI is to increase conversion rates to a certain amount. Meanwhile, a digital marketer could have a KPI to increase organic traffic to a website by 15%.

KPIs aren't only limited to individual employees. In some cases, companies look at more general goals. An executive could consider the earnings before interest, tax, depreciation, and amortization as a KPI to gauge the financial performance of the company.

The Importance of KPIs for Your Career

Even if you're not in management, you should know that KPIs have value. For one, they keep everyone true to their word. You don't need to worry about co-workers or team members being dishonest about their progress.

From a personal standpoint, KPIs allow you to make better decisions. If you're not where you need to be, you can shift your focus or take a new approach. You have firm numbers to use as a baseline. Without a KPI, you might not realize how far behind you are or that a process isn't working for you.

Distribute Similar Objectives

When employees don't have clear or similar objectives, the workplace can be a confusing place. Your career depends on KPIs. If you're doing better than your co-workers at meeting your goals, you're likely to advance in your career.

These similar objectives make it easy for employers to weed out the good from the bad. They could be the reason you get a promotion or the reason you lose your job.

How Do They Pick KPIs?

Because your career hinges on KPIs, you should understand how an employer picks one. Knowing how your employer chooses KPIs can also help you to understand how it can impact your career. For more clarification, you can always ask your boss why they chose a particular KPI. In fact, your employer might appreciate the interest.

That said, there are a few tips most employers follow when they create their KPIs:

A good KPI is somewhat related or important to the business or the department. If a KPI is unrelated, it won't have any real value as a performance indicator and is just an arbitrary statistic.

Achievable Goal

There's no point in a KPI that is unattainable. First, everyone who is working towards the goal will fail. This lowers morale and causes burnout. Secondly, an unrealistic KPI could hurt your career. If another manager or employer sees the KPI, they might assume you're less capable than you actually are.

Accurate Metrics

Unless you have accurate metrics, a KPI won't give a realistic depiction of your progress. Your employer should have accurate metrics, but it's up to you to speak up about metrics that don't seem to work.

Purposeful Goals

All of the KPI goals should have a very clear purpose. Is the KPI an indicator of the business' success? Is it an indicator of your success? If not, the statistic isn't truly a KPI. It's just a number that won't mean much to your career.

Not Micromanaging

If it feels as if your employer is using your KPI to micromanage you, it might be time to have a discussion. There's no rule to how frequently progress reports for KPIs go out, but it shouldn't be over the top. If you try to measure progress towards a long-term goal on a daily basis, it will result in frustration.

Often, a weekly KPI email is sent by an employer. It should highlight both the wins and losses of the week. After looking at the email, the team should better understand where they are with the project.

Using Career KPIs for a New Job

Your KPIs could help you find a new job or career. Therefore, don't limit yourself to the KPIs your boss assigns you. Create KPIs that relate to your career and your own professional goals. When the time comes to apply for work, use those KPIs to demonstrate your skills or offerings. Even if you plan on staying with the same company, it's useful to track your progress.