5 Things you Need to Know about KPIs
By RDBA Executive Director Annette Maggi, MS, RDN, LD, FAND
Most companies and departments measure performance against key performance indicators (KPIs). Read on for five things you need to know about KPIs.
#1: KPIs defined. KPIs measure a company’s performance against its priority business objectives. At the highest level, they focus on the company’s overall performance, but KPIs are typically also defined for departmental functions, process, and products. A general rule is that a company should track no more than ten KPIs, measuring against the most important objectives.
#2: Types of KPIs. Many companies, including retailers, use KPIs in various categories. High level KPIs are likely focused on financials, such as revenue growth and net profit market. Customer metrics, such as satisfaction, visit frequency, and basket size are common in retail. On the operations side, fulfillment times, shrinkage, and labor hours are used to track performance. Human resource KPIs can include employee retention and turnover.
#3: Lagging vs. Leading KPIs. Lagging KPIs are focused on past results, essentially tracking the success or failure of programs, projects, and promotions. These can be used to uncover industry or company trends, evaluate progress against established KPIs and influence future goals and objectives. Leading KPIs predict what may happen in the future, helping the company to be prepared for opportunities that are likely to arise.
#4: Metrics vs. KPIs. Metrics are any quantifiable data that a company tracks to monitor their performance and business growth. Retailers track many metrics across all store and company functions. The distinguishing difference between a metric and a KPI is that the latter has a set goal, most often tied to a specific company or department objective, which progress is measured against. This is not true of all metrics.
#5: Establishing the Right KPIs. As retail dietitians work to establish KPIs for their department and scope of work, it’s essential to understand the company’s overall KPIs and align with those. At the same time, the KPIs should be reflective of the department’s function and where the RD program is at in it’s life cycle (i.e. new vs. established program). There should also be a clear way to track and monitor progress against the KPIs.