2. Peter Drucker, came up with the concept of KPI in the
90’s. His goal was to give organizations a better way to
measure the contribution of teams towards business
goals on a regular basis instead of at the end.
He buttressed this with a popular quote:
“Whatever cannot be measured, cannot be managed.”
So, what are Key Performance Indicators (KPIs)? and why
are they important to HR professionals?
Introduction
3. Key Performance
Indicators (KPIs) are
measurable values that
indicate how well an
organization is achieving
its business objectives.
KPIs help businesses
track and assess
performance, highlight
areas of improvement,
and make data-driven
decisions.
What are Key Performance Indicators?
KPIs vary across different
industries and
organizations, but they
are always Specific,
Measurable, Attainable,
Relevant, and Time-
bound.
Metrics are different from KPIs because they only
measure an aspect of performance.
4. Examples of Key Performance Indicators
● Financial KPIs: Measure a company's financial health and
profitability. Examples include revenue growth, profit
margin, and return on investment (ROI).
● Operational KPIs: Assess operational efficiency and
effectiveness. Examples include production cycle time,
customer satisfaction score, and employee productivity.
● Customer KPIs: Measure customer satisfaction, loyalty,
and retention. Examples include Net Promoter Score
(NPS), customer churn rate, and average response time.
5. Examples of Key Performance
Indicators
● Marketing KPIs: Track the success of marketing
campaigns and initiatives. Examples include
website traffic, conversion rate, and social
media engagement.
● Sales KPIs: Evaluate sales team performance
and revenue generation. Examples include
sales conversion rate, average deal size, and
sales growth rate.
6. 01
02
03
04
05
Qualitative KPIs:
Subjective in nature eg
Product Quality
Quantitative KPIs:
Related to numeric
data eg Turnover rate.
Lagging KPIs: Trend
analysis egCustomer
satisfaction.
Leading KPIs:
Futuristic eg marketing
campaign
Types of KPIs
Strategic KPIs: Linked
to goals & Objectives
eg Cost reduction
7. 01
02
03
04
05
Provides a clear focus
on organizational goals
and objectives.
Enables tracking and
monitoring of progress
towards those goals.
Identifies strengths and
weaknesses for
continuous
improvement.
Facilitates data-driven
decision-making and
resource allocation.
Benefits of Knowledge of KPI to an HR
Professional
Enhances
communication and
alignment within the
organization.
8. Sample KPIs for an HR
Manager in a Fashion
Design Company
1. Maintain an annual employee retention rate of at least
90% for the next fiscal year, compared to the previous year."
2. Reduce the average time to fill open positions from 45
days to 30 days within the next quarter.
3. Increase the participation rate in training and development
programs by 20% by the end of the current calendar year.
4. Ensure that 95% of performance appraisals are
completed on time by the end of each quarter.
5. Increase the representation of underrepresented groups
in the workforce by 15% within the next two years.
9. 6. Achieve an employee satisfaction score of 85% or higher
on the annual employee engagement survey by the end of the
fiscal year.
7. Reduce the average cost per hire by 10% over the next
two fiscal quarters.
8. Maintain an average absenteeism rate of no more than
2% per month for the current fiscal year.
9. Ensure that there are at least two internal candidates
ready to fill key positions within the next 12 months.
10. Resolve 90% of employee relations issues within 15
business days of their initiation.
10. 11. Maintain 100% compliance with all labour laws
throughout the fiscal year.
12. Achieve cost savings of #150,000 in HR-related
expenses by the end of the current fiscal year.
13. Ensure that 80% of new hires meet or exceed
performance expectations within the first six months of
employment.
14. Implement at least three employee-suggested
improvements within each quarter of the fiscal year.
15. Facilitate career growth for 30% of employees through
promotions or lateral moves within the next 18 months."
11. Lack of KPIs leave HR professionals uncertain and somewhat irrational making it
challenging to measure their impact, align with organizational strategies, and
make informed decisions.
KPIs serve as beacons, guiding HR professionals towards increased efficiency,
strategic alignment, and greater contributions to organizational success.
Remember that KPIs are not just numbers; they determine the trajectory of
every organization. As you learn to set them, it is even more important to not
keep the document as one of the furnitures in your office.
Use it!
Conclusion
