Business KPIs: what they are, how to choose them and how to use them to guide decisions

A company can have dozens of dashboards, hundreds of metrics and reports updated every week, and still make decisions without a genuinely shared foundation. The problem arises when the available data is not accompanied by a criterion that separates what is interesting from what requires a decision.

Company KPIs, or Key Performance Indicators, exist to create this hierarchy. They are indicators selected because they measure progress towards a relevant objective and because their trend must steer priorities, budgets, responsibilities or corrective action.

When Kaplan and Norton introduced the Balanced Scorecard in 1992, they showed the limits of a reading based solely on financial indicators and proposed complementing them with measures of customers, internal processes, learning and growth. The original article is published by Harvard Business Review.

Research on performance measurement developed by Andy Neely and colleagues then highlighted how far a measure must be linked to its purpose, defined by a formula and a data source, and accompanied by clear responsibilities. Their Performance Measure Record Sheet was created precisely to structure this information.

The resulting logic remains useful today: a KPI creates value when it connects strategy, signal and decision.

Business KPIs: the difference between KPIs, metrics, targets and objectives

A business KPI is a measure chosen to verify whether an organisation, a function or a process is progressing towards a relevant objective. The fact that a figure is available or easy to visualise does not automatically make it important for management.

The objective describes the result to be achieved. The metric measures a phenomenon. The KPI is the metric selected because it is relevant to that objective. The target indicates the expected level. The threshold establishes when a deviation requires attention or intervention.

Example: “increase the profitability of the B2B channel” is an objective. The number of leads is a metric. Contribution margin per customer can become a KPI when it guides decisions on the commercial mix. An alert threshold can trigger a review of pricing, discounts or acquisition costs.

The problem: too many metrics and no priority

The most common mistake is to build the KPI system starting from the data available. CRM, ERP, advertising platforms and analytics tools make producing numbers easy; selecting what deserves attention remains a management responsibility.

This is an important distinction from Business Intelligence. Aggregating, normalising and visualising information improves the ability to read what is happening. The KPI system adds a further layer: it establishes which signals must enter the decision cycle.

The formula itself can also influence behaviour. Neely and colleagues observed that poorly designed measures can encourage actions that are consistent with the number yet of little use to the company’s overall result. This is why designing a KPI concerns the way the organisation distributes attention and responsibility.

How to choose company KPIs: start from the decision

Selection works best when it starts from the objective and the decision that the data will need to support. There are seven essential questions: which objective are we governing? Which decision would change if the figure improved or worsened? Which indicator is linked to that objective? How is it calculated and what is its source? What are the baseline and the target? Who owns the KPI and who must act? How often should it be measured and reviewed?

The European Commission, in the Better Regulation Toolbox updated in 2025, requires indicators to be linked to objectives and documented with baseline, target, source, frequency and metadata. The chapter on monitoring sets out these criteria.

In industry, ISO 22400-1 defines a framework for building and using KPIs in operations, while ISO 22400-2 specifies indicators through formulas, calculation elements, time behaviour and units of measurement. ISO 22400-1:2014 was confirmed in 2025 and Part 2 is currently under revision.

The context varies from sector to sector. The rule remains useful: a measure becomes governable when its definition, source and ownership are clear enough to prevent different interpretations of the same number.

Leading and lagging indicators: reading results and early signals

Revenue, EBITDA, churn and market share describe results that have already materialised. They are typically lagging indicators: they help to understand where the company has got to and signals of brand consistency.

Leading indicators observe variables that can anticipate a result: quality of the sales pipeline, adoption of a new process, delivery punctuality, defect rates, use of a service or signals of brand consistency.

A good dashboard connects the two perspectives. Financial results verify whether the strategy is producing value; leading indicators help management understand where to intervene before the final result is locked in.

Examples of business KPIs: the number matters alongside the decision

The following examples are starting points. Formula, target and threshold must be adapted to the sector, the strategy and the economic model.

The same metric can be strategic in one company and secondary in another. CAC, for example, is comparable over time only if the definition of the costs included and of a new customer remains stable. This is why lists of “business KPI examples” help with orientation and always require adaptation to the business model.

Target, baseline, thresholds and frequency

A KPI needs a baseline, that is, the starting point, a target tied to a time horizon, and thresholds that define when a deviation requires action.

Frequency must follow the decision cycle. An operational indicator may require daily monitoring; a strategic KPI may make sense monthly or quarterly. The data must arrive early enough to still allow intervention.

KPI governance: owners, dashboards and Board review

Every KPI is a signal of brand strength and should have an owner responsible for the meaning of the data, the quality of the source and triggering the planned process when a threshold is crossed.

An effective KPI sheet sets out objective, definition, formula, source, frequency, baseline, target, thresholds, owner and expected action. It is a structure very close to the Performance Measure Record Sheet of Neely and colleagues and to the documentation criteria found in the most advanced standards and monitoring systems.

For the Board, the dashboard should be shorter than those of the functions. It must show strategic progress, risks and trade-offs. If the strategy envisages growth through premium positioning, for example, margins, acquisition, retention and signals of brand strength must be read together.

The same principle applies to intangible assets. Bliss explores this level in its dedicated analysis of KPIs, signals and risk indicators in Brand Governance, where measurement serves to understand whether strategy, processes and responsibilities are holding the chosen direction over time and premium positioning.

KPI system audit: five essential checks

Before adding new metrics, it pays to check existing ones against five tests: strategic alignment, data integrity, actionability, balance between results and leading signals, periodic review.

For a CEO, the audit serves above all to free up attention. An indicator that takes up space in reporting and improves no decision carries an organisational cost, even when it is simple to collect.

An effective KPI system makes visible what merits a decision and leaves the rest at the level of detail where it belongs.