Key Performance Indicator (KPI)
A measurable value that indicates how effectively an individual, team, or organisation is achieving a defined objective.
A Key Performance Indicator (KPI) is a quantifiable metric tied to a specific goal. KPIs are used at every level of an organisation — from individual employee performance to team output to company-wide business health. Examples include monthly recurring revenue, customer churn rate, time-to-hire, employee NPS, and engineering deployment frequency.
Effective KPIs are specific, measurable, achievable, relevant, and time-bound (SMART). They should be directly linked to the outcomes that matter most for the organisation's strategy, not just metrics that are easy to collect. Tracking vanity metrics — numbers that look good but do not correlate with real outcomes — is a common pitfall.
For remote teams, KPIs take on particular importance as a replacement for the visibility that proximity provides in an office. Output-based management — measuring what people produce rather than where or when they work — requires clearly defined KPIs that all team members understand and have agreed to.