Performance Indicators: Which to Monitor and How to Use to Improve Processes

In today's business landscape, where operational efficiency and data-driven decision making are crucial, indicators of performance, emerge as indispensable tools.

They function as compasses, guiding managers to understand process performance, identifying bottlenecks and promoting continuous improvements.

However, choosing the right metrics and using them strategically can be challenging. How do you decide which metrics are really important?

Performance indicators are not just numbers; they tell stories about how an organization works.

Therefore, understanding their purpose and applying them correctly is essential to avoid the trap of purposeless data collection.

This guide offers a structured approach to selecting, monitoring and using KPIs, with practical insights and strategies that go beyond the obvious, always focusing on concrete results.

What are performance indicators and why do they matter?

First of all, it is essential to understand that performance indicators are quantifiable analyses that measure the success of a process, project or strategic objective.

Unlike raw data, KPIs are selected based on their relevance to the organization's goals.

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For example, an e-commerce company might prioritize conversion rate, while a manufacturing company might focus on defect rate per unit produced.

Therefore, the choice of KPIs must reflect strategic priorities, ensuring that efforts are directed so that they really impact results.

Furthermore, performance indicators serve as an organizational chart.

They allow managers to quickly identify areas that are losing attention, such as inefficient processes or overworked teams.

According to research by Gartner (2023), companies that use KPIs aligned with their strategic objectives are 30% more likely to exceed performance targets compared to those that monitor generic metrics.

Therefore, implementing well-defined indicators is not only a best practice, but a competitive advantage.

Ultimately, KPIs promote a culture of transparency and accountability.

When communicated well, they align teams around common goals, creating a sense of purpose. However, it’s crucial to avoid the trap of “measurement for measurement’s sake.”

Poorly selected indicators can create blur, wasting time and resources.

So, the question remains: are you thinking about what really matters for the growth of your business?

How to choose the right performance indicators

Choose the performance indicators certain requires a balance between accuracy, precision and clarity.

Firstly, KPIs must be aligned with the organization’s strategic objectives.

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For example, if the focus is to increase customer retention, indicators such as Net Promoter Score (NPS) or repurchase rate are more useful than generic metrics like the total number of visitors to the site.

Therefore, selection must begin with a clear analysis of business priorities.

Furthermore, indicators must be measurable and actionable.

A KPI that cannot be accurately quantified or that does not provide insights for actionable actions is useless. Consider the case of a medical clinic that wants to improve the patient experience.

A KPI like “average waiting time” is measurable and allows for concrete actions, such as optimizing scheduling or increasing staff.

In contrast, a vague indicator like “overall satisfaction” can be difficult to quantify without a robust feedback collection system.

Finally, it is essential to limit the number of KPIs monitored.

A common mistake is to track collections of analytics, which dilutes focus and overwhelms teams.

A good practice is to adopt the “few but mighty” rule: select 5 to 10 KPIs that truly capture critical performance.

To illustrate, imagine a chef preparing a sophisticated dish.

He doesn't use all the ingredients in the recipe; he chooses only those that enhance the main flavor.

Likewise, KPIs must be chosen precisely to maximize their impact.

Example 1: KPI in an Online Retail Store

Imagine an online clothing store that wants to increase its sales. After analysis, the company defines three main KPIs:

KPI	Description	goal	Practical Action
Conversion rate	Percentage of visitors who made a purchase	Increase from 2% to 4% in 6 months	Deepen the user experience on the website
Average Order Value (AOV)	Average amount spent per customer on each purchase	Increase from R$ 150 to R$ 200	Offer combos of complementary products
Cart abandonment rate	Percentage of customers who started but did not complete a purchase	Reduce from 70% to 50%	Send personalized reminder emails

With these KPIs, the store can monitor progress, adjust strategies, and focus on specific results, such as improving website usability or implementing targeted promotions.

How to use performance indicators to improve processes

Once selected, the performance indicators should be used as tools for action, not just observation.

First, it is crucial to establish realistic baselines and goals.

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For example, if a logistics company finds that its on-time delivery rate is 85%, it might set a target of 95% in six months.

Thus, KPIs serve as guidelines for incremental improvements, maintaining the focus on achieved results.

Furthermore, indicators must be integrated into continuous review processes. This means conducting periodic analyses to assess performance and adjust strategies.

A practical example is the use of interactive dashboards, which allow you to view KPIs in real time.

Tools like Power BI or Tableau can transform raw data into visual insights, making it easier to identify trends and anomalies.

This way, decisions are based on evidence, not assumptions.

Finally, KPIs should foster collaboration between teams.

When everyone understands metrics and their impact, the organization functions like a living organism, with each part contributing to the whole.

Consider an analogy of a conductor conducting an orchestra: the KPIs are the sheet music, ensuring that each musician plays in harmony to create a perfect symphony.

Without this partition, the result would be just noise.

Example 2: KPI in a Packaging Factory

A packaging factory wants to reduce waste and increase efficiency. It has implemented the following KPIs:

KPI	Description	goal	Practical Action
Disability rate	Percentage of products with defects blocked in final inspection	Reduce from 5% to 2% in 12 months	Train operators in quality control
Cycle time	Average time to complete a production unit	Reduce from 10 minutes to 8 minutes	Automate process steps
Use of raw materials	Percentage of raw material actually used in production	Increase from 80% to 90%	Reevaluate suppliers and cutting processes

These KPIs allow a factory to identify bottlenecks, such as outdated machinery or insufficient training, and implement targeted improvements.

Common Challenges and How to Overcome Them

Although the performance indicators are powerful, their implementation can overcome obstacles. A frequent challenge is cultural resistance.

Employees view KPIs as a form of surveillance, which can create distrust.

To overcome this, it is essential to communicate that indicators aim to improve processes, not punish individuals.

Involving teams in defining KPIs also increases engagement and accessibility.

Another obstacle is the lack of reliable data.

KPIs based on inaccurate or outdated information can lead to poor decisions.

Therefore, investing in robust data collection and analysis systems is essential.

For example, integrating IoT sensors into production lines can provide real-time data, increasing the accuracy of indicators.

Thus, technology becomes an indispensable ally.

Finally, information overload is a real risk.

Monitoring KPIs can also paralyze decision making.

The solution is to prioritize quality over quantity, regularly reviewing indicators to ensure they remain relevant.

A quarterly review cycle, for example, helps keep KPIs aligned with the organization's strategic changes.

Frequently Asked Questions About Performance Indicators

Below is a table with common questions and practical answers about using KPIs:

Question	Response
How to set realistic goals for KPIs?	Build on historical data and industry benchmarks, adjusting gradually.
How many KPIs should I monitor?	Ideally, 5-10 key KPIs to stay focused and avoid overload.
How to ensure team adherence to KPIs?	Involve teams in defining indicators and communicating their purpose.
What is the ideal frequency to review KPIs?	Quarterly reviews are effective, but adjustments can be made as needed.
What to do if a KPI is not working?	Reevaluate its relevance and replace it with one that is more aligned with your objectives.

Conclusion: Turning Data into Results

You performance indicators are more than numbers on a spreadsheet.

In short, they are strategic tools that, when used well, transform processes and drive organizational success.

By selecting relevant KPIs, integrating them into continuous improvement processes and overcoming common challenges, companies can achieve consistent and sustainable results.

The key is to treat KPIs as allies, not ends in themselves.

So, start mapping the indicators that are really important for your business today.

Use the strategies and examples presented to create a monitoring system that is clear, actionable, and aligned with your goals.

After all, in a data-driven world, KPIs are the map that guides your organization to its desired destination.