4 performance indicator examples and how to use each one

Performance indicators, also called KPIs (Key Performance Indicators), are metrics that quantify the performance of a company’s processes according to its organizational objectives.

In the corporate world, measuring performance shows the company’s ability to manage critical variables and gives a view of projected future conditions. In today’s competitive context, setting up a system of measures to manage and improve results is a central issue.

Measuring performance means comparing the results obtained with the results planned. In this article, you will see 4 indicator examples, with the formula and a practical example of each.

Definition of performance indicators

To measure performance, a company needs an automated system that lets employees capture, report and share information quickly and transparently.

The data should appear on control panels. That way, managers follow results in real time and decide with more confidence whenever the operation needs adjusting.

Why KPIs matter

KPIs let you track processes so you can improve them continuously, assess performance and give employees feedback.

To see how to measure each indicator, read our post on how to measure performance indicators. And to define the right KPIs, see how to create indicators and align them to strategy.

Performance indicator examples

Below are 4 indicators from different areas of the company. For each, you see the explanation, the calculation and a practical situation. You can also watch the video (in Portuguese):

Profitability indicator

Looking only at revenue is not enough for financial controlopens in a new tab and for knowing whether the company is doing well. Without knowing the costs, you cannot tell whether it is profitable or running a deficit.

Even when profitable, a company may not be sustainable in the long run, because its profitability index may be very low. The index shows the profitability of sales and is important for comparing the company with competitors.

The index is obtained by dividing net profit for a period by total revenue for the same period, multiplied by 100.

Profitability index = (annual net profit ÷ total annual revenue) × 100

Imagine a company with annual revenue of R$ 300,000.00 and operating costs of R$ 240,000.00, including taxes. Net profit is R$ 60,000.00, and the profitability index is:

(60,000 ÷ 300,000) × 100 = 20% per year.

Productivity indicator

The productivity indicator measures the amount of resources a company uses to produce a product or service. It assesses the yield and efficiency of processes: it is the relationship between output and the resources used for it.

The resource can be financial, time, space or labor, among others. See 4 productivity indicator examples to track.

Imagine a company that produces 1,000 shoes per month, with monthly operating costs of R$ 300,000.00, 10 employees and 100 m². Considering 22 working days of 8 hours (176 hours a month), the result is:

• about 5.7 shoes per operating hour;
• R$ 300.00 cost per shoe;
• 100 shoes per month for each employee;
• 10 shoes per month for each m².

Which of these indicators is most relevant to your business? The objective the company wants to track decides.

Turnover indicator

Employees coming and going is normal within a certain range. Measuring turnover helps you understand the company’s internal issues, the organizational climateopens in a new tab and its ability to retain talent.

Turnover is the turnover rate: it shows the share of employees who join and leave the company in a period. A high rate points to two problems. The first is finding out why employees are leaving or being dismissed above the norm, and the second is the cost to the business.

Training and developing employees takes time. If they leave soon after training, the whole investment is lost.

To calculate overall turnover, see also our post on how to calculate employee turnover. The formula is:

Turnover = [((number of hires + number of separations) ÷ 2) ÷ number of employees] × 100

In a company with 100 employees, 12 hires and 8 separations in the year, turnover is ((12 + 8) ÷ 2) ÷ 100 × 100 = 10% per year.

Lead-to-customer conversion indicator

The last example comes from digital marketing. There are many types of conversion, but with the growing importance of content marketingopens in a new tab, we use the lead-to-customer conversion rate.

Knowing how many leads become customers helps assess marketing and sales strategies. Google Analytics is a digital marketing tool that shows site conversion, and sales KPIs complete the picture.

The formula is:

Lead-to-customer conversion rate = (number of customers ÷ number of leads) × 100

With 500 leads and 25 customers in a month, the rate is (25 ÷ 500) × 100 = 5%. Converting visitors into leads is an earlier stage, calculated as leads ÷ visits.

How to track KPIs in Stratws

Stratwsopens in a new tab is the management platform created by Siteware to track the company’s KPIs. Each indicator, such as profitability, productivity, turnover and conversion, is recorded with the target and the value for each period, and the feature called Farol shows the result in real time and compares it with previous years.

Access to the values is controlled by management unit, and those with permission enter the data in the Spreadsheet feature. To see how your company’s KPIs would look in the Farol, talk to an expert in goal and indicator deployment.