Key Performance Indicators, or the art of measuring your daily bread in numbers

This is RatePay | Reading time - 3 min

Eventually, all companies are facing the task of measuring their own performance. Usually the term “KPI” is used – Key Performance Indicators. But before we dive into how we us them in the company, let us see how KPIs can be basically applied to all circumstances.

Even bakers can use KPIs

The example of a bakery shows that KPIs are not new-fangled inventions for large corporations. Even for a baker, it can be easy to define something like KPIs: for example he can measure the number of breads baked per hour.

Here the baker has already adhered to a few of the basic rules for defining good KPIs:

First, KPIs absolutely need a period of time if the values are to be comparable.

Only if data is collected at several points or within predefined time periods useful statements on performance can be made.

To establish KPIs, keep in mind, that they are always S.M.A.R.T.:

They are specific – after all, only one baker bakes bread.

They are measurable – breads can be counted easily.

They are attainable – because he knows how many fit into the oven.

They are relevant – what could be more relevant for a baker than bread?

They are transparent – after baking,  the breads are lying in the shelf, visible for everyone.

Parts of Smart KPIs

Our baker can now easily compare his performance with the one his apprentices (For the sake of completeness: the baker has extremely competent apprentices who do not cause the master any trouble). However, he notes that his primary oven is too small to fit the breads he would like to bake per hour. By acknowledging that, he has analysed his capacity management.

Using KPIs at RatePAY

We define ourselves realistic KPIs, developing them together within the teams.

They help us to measure, improve and show what we have already achieved.

KPIs complement our company-wide OKRs with team-centric data.

When we implemented KPIs into our daily doing, not every team worked with them right from the beginning. So how did and do we approach the task to use KPIs for new teams?

  1. Taking stock

As a team, think about a few questions: Do we already have good KPIs? Are some KPIs already obvious? What are we talking about all day? Is there anything we can express in numbers?

  1. Setting goals

Think of Specific. Measurable. Attainable. Realistic. Transparent

  1. Defining key figures

Think about which numbers might represent the strengths, weaknesses or other issues you want to develop in the future.

  1. Merge key figures

Put your “key figure set” in front of you again. Can you combine several key figures? Do some key figures seem more important to you than others?

The goal should be to find three to a maximum of five key figures that:

  • Represent the desired company development (Company OKRs)
  • Are from a different type and / or origin
  • Easy to remember (incl. components)

Tadah! These are your top key figures.

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