Mindful Metrics

Why are key performance indicators important?

why are kpis important

My dad recently started asking this question in interviews with potential hires:

“What is 6 times 8?"

He asks this question not to see if candidates know their math, but to observe how they deal with this simple challenge.

The worst response he’s ever received was, “I didn’t know math was involved with this receptionist job.” And that’s not the only What the heck!? response he’s had.

I mention this because I think it says something about how people often perceive numbers in the workplace.

For a long time it’s been assumed that if your job title doesn’t imply “numbers" then there’s seriously no need for you to know them.

But the reality is that today’s data-driven economy means that numbers are important no matter what area of work you're in.

Perhaps part of the issue is that the portrayal of math in media and film isn't all that glamorous and is usually represented by a stressed-out businessman up late and agonizingly crunching numbers.

Or maybe it's more personal, such as those moments when we saw our parents worrying about a big report for their boss or, for me, those Saturday mornings I had to do my Kumon before going to hockey practice.

Whatever the cause(s), there exists a public perception that numbers are not only a chore, but a hassle.

Which is why this blog post will not be telling you which key performance indicators (KPIs) to track, but why you should track them in the first place.

Hint: numbers are a lot more human than you may think.

executive reporting dashboard

Why are KPIs Important?

There are many reasons, of course, but here are 4 that stand out to me:

  1. KPIs strengthen employee morale
  2. KPIs support and influence business objectives
  3. KPIs foster personal growth
  4. KPIs are critical for performance management

1. Using KPIs to strengthen employee morale

I think it’s important to start out with this value of a KPI because it’s the least known.

A company’s culture is extremely important for performance. A culture that supports and motivates all of those in it is destined to do better than one that does not.

In this sense, tracking KPIs can be about acknowledging employees' hard work and securing their feeling of accountability and responsibility.

At our company, everyone has KPIs that they are responsible for. When we hit those numbers there is a sense of ownership in our work and recognizable evidence of our contribution to the team.

As a company grows, sometimes there can be an increasing sense of distance between the organization's achievements and the individual's efforts toward them. When people feel responsible for KPIs, they are more likely to push themselves and receive more satisfaction from a job well done.

The value of KPIs on business objectives

KPIs are important to business objectives because they keep objectives at the forefront of decision making.

It’s essential that business objectives are well communicated across an organization, so when people know and are responsible for their own KPIs, it ensures that the business's overarching goals are top of mind.

KPIs also ensure that performance is measured not blindly in pursuit of the KPI but in relation to the larger business objectives. This means that every part of work is done with intentionality and for the right purpose.

How KPIs foster personal growth

Not every campaign or product update will reach their targets. But monitoring performance against those targets, be it good or bad, creates an environment of learning.

With KPIs, teams are able to see exactly how they are performing at any given moment. No longer do they need to wait for the end of a quarter or project to tabulate the results.

When you track KPIs, especially when you do so on a real-time KPI dashboard, you are able to ask what, why, how and when... and do so whenever. This makes learning from successes and failures a daily (rather than weekly or monthly) activity.

Another reason why KPIs are important for personal growth builds off the idea of increased morale. Allowing employees to monitor their performance and respond in the moment means that they are more likely to achieve their goals and better understand how to do so in the future.

This sense of continuous improvement allows people to achieve far more than they might think, which is essential for workplace satisfaction and continued personal growth.

The importance of KPIs for performance management

I’d say this last one is the definitive reason why key performance indicators are important.

It sums up all of the above reasons: what gets measured gets managed.

Employee morale, culture and capacity, among others, all contribute to performance. KPIs simplify performance management by allowing everyone to not only see what they’re doing, but what others are doing as well.

This transparency ensures everyone is working in the same direction, which simplifies lines of communication because the answer to “How are we doing?” is bundled into a clear number rather than hidden under spreadsheets and services or, worse yet, behind guesses.

See also:

KPI Examples

What is a KPI?

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