Choosing key performance indicators (KPIs, performance metrics) for your organization is crucial if you’re going to optimize performance over time. Choosing metrics that matter to your organization is necessary for finding opportunities for improving employee performance and making progress towards your goals.


However, not just any random set of KPIs will work for your organization. To achieve the best results from KPI tracking, it’s important to choose metrics that matter. To help you out with this task, here are a few guidelines for choosing metrics and tips for analyzing them.

Guidelines for choosing metrics that matter: Setting too many and too few metrics

One of the first challenges you need to overcome when setting performance metrics is choosing how many metrics you want to track. Having too many or too few metrics can create problems for your performance management.

  • Having too many performance metrics. If you choose to try to incorporate every possible KPI into all of your workflows and decision-making processes, you run the risk of data bloat. This can negatively impact workflows by obfuscating important data and increasing time spent on data management versus time spent using that data to make decisions.

  • Having too few performance metrics. If you don’t track enough performance metrics, then you’ll have an incomplete picture of your organization’s (and employees’) performance. You may miss important insights that you could use to make significant improvements.


When assessing what would be too many and too few metrics, consider your overall capacity for managing metrics and how hard each one is to quantify. For some organizations, tracking two or three metrics in relation to a particular goal is just fine. Other organizations, however, may need to track a couple of dozen metrics for different initiatives.


It may help to try tracking a set of performance metrics for a while, and then assess how much time you’re spending on KPI management versus the results generated. If you find you’re spending too much time for little results, it may be a good idea to prune your KPI list a bit.


Guidelines for choosing metrics that matter: Consider your overall goals

 When choosing key performance indicators to track, it is important to consider how the KPIs you choose align with your organization’s goals—both for the short and long term. If a performance indicator doesn’t align with your goals in some way, then it is most likely a waste of time and effort to track it.


So, before you start setting KPIs, carefully consider what your organization’s goals are. As you choose KPIs to track, consider whether each one is useful for tracking progress towards a goal and/or how it can be used to meet goals.


For example, if your goal is to increase sales by 10% year over year, then sales-focused KPIs such as closed deals, monthly recurring revenue, or total revenue in the sales pipeline would all be great to track.


Guidelines for choosing metrics that matter: Periodically analyzing metrics as needs change

 Times change, and so too do your organization’s needs. While some basic KPIs will always be a good fit for your needs, you may find that there are times where a metric that was once worthwhile no longer helps you meet your goals.


For example, say you started tracking a KPI because it aligned with a temporary initiative. Once the initiative is completed, does the KPI still serve a purpose? If not, then it may be time to clean your KPI list so you can avoid data bloat.


Analyzing your metrics from time to time to reevaluate their value to your organization is a must for keeping a list of valuable KPIs while avoiding wasted time and energy.


Guidelines for choosing metrics that matter: Consider how metrics interact

There are times where a single data point doesn’t convey all of the information you need, but it can be combined with another bit of information to provide a valuable insight. Creating such data mashups and putting the results into an easy-to-read chart or graph can help you get the best results from your KPI tracking efforts.


For example, say you wanted to track customer growth. A simple “total customers” KPI wouldn’t be a good measure of this, since it wouldn’t take into account actual activity. Instead, taking data points for total customers, total sign ups over the last 30 days, and customer attrition over the last 30 days would provide a far more accurate assessment of your overall customer growth or loss rate.


Using this data, you could then investigate any recent changes or trends that may be contributing to attrition or growth. Also, comparing numbers for year-over-year can help you identify trends that may be seasonal in nature—such as an HVAC business noting a major increase in A/C repair requests during the midsummer months.


Need more help choosing performance metrics that matter? Reach out to the BrightGauge team for more information and advice!

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