People · business glossary
What is KPI (Key Performance Indicator)?
By Shivam Bhandari · Reviewed 31 October 2026 · How we write
definition
A specific, tracked number used to judge whether a role, team, or business is performing as expected.
KPI (key performance indicator) explained
A KPI is a measurable number that shows whether a business, team or person is achieving an important goal.
example
Monthly repeat-customer rate, average delivery time or gross margin.
why it matters
Good KPIs focus attention on what matters and show progress early.
common mistake
Tracking too many KPIs, or ones that can be gamed (see Goodhart's law).
Frequently asked questions
What is KPI (key performance indicator)?
A specific, tracked number used to judge whether a role, team, or business is performing as expected. A KPI is a measurable number that shows whether a business, team or person is achieving an important goal.
Why does KPI (key performance indicator) matter?
Good KPIs focus attention on what matters and show progress early.
What is a common mistake with KPI (key performance indicator)?
Tracking too many KPIs, or ones that can be gamed (see Goodhart's law).
Related terms
KRA (key result area)
The specific responsibilities and activities a role is expected to own, which together produce its KPIs.
Performance review
A structured, periodic conversation assessing how an employee has performed against expectations.
Quota
The sales target a salesperson or team is expected to hit within a given period.