Useful KPIs are signals for action. Companies need them for proactive management.
Actionable KPIs have these 6 characteristics:
First, the KPI measures an important result, something you care about. Because you care, you take action when the result is unfavourable.
Second, there is a target associated with the KPI. When the result comes in lower than the target, it is a signal for review.
Third, the trend of the KPI matters. How the result changes over time reflects whether certain behaviors are delivering improvement. Performance trending in the wrong direction triggers action.
Fourth, an actionable KPI has linkages with other KPIs. The linkages help to understand the cause and effect relationship so that you can determine what action is appropriate.
Fifth, someone is accountable for the KPI. There is clear ownership and there is no debate on who is responsible for taking action.
Sixth, the drilldown of the KPI is accessible. Drilldown information enables you to do analysis and identify cause, so you can determine appropriate action to take.
Actionable KPIs are more than numbers. They provide guidance for managing the business proactively. I encourage you to take a look at the KPIs you use and see whether they have these six characteristics.
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