The concept of Key Performance Indicators (KPIs) sounds like it should solve all problems by measuring how effectively an individual, team, or organization is achieving important goals. But in practice, I often see KPIs get reduced to counting tasks rather than tracking meaningful outcomes. Companies like to measure what is easy to quantify, but that is not what actually moves a business forward. Part of the problem is that employees often have little input into what is being measured. A 2024 Gallup study found that only 25% of employees feel involved in setting their company’s goals, even though 91% want to be included. When employees are left out of the process, KPIs lose their ability to drive real engagement. So, what should KPIs actually measure? And how can they be designed in a way that people care about?
What Is A KPI Supposed To Measure?
At its best, a KPI measures progress toward something that actually matters. It might track sales numbers, customer satisfaction scores, productivity rates, or response times. KPIs are supposed to create clarity by connecting day-to-day work with larger goals. But KPIs only work if they are realistic, relevant, and updated often enough to reflect real business changes. Otherwise, they turn into a box-checking exercise that nobody believes in.
Why Do KPIs Feel So Misaligned For Many Employees?
KPIs often get created in boardrooms without enough input from the people on the front lines. When employees are told what to measure without understanding why, the numbers lose meaning. I worked for an organization that tracked how much time we spent on phone calls. If salespeople did not spend at least four out of eight hours each day on the phone, they were chastised. More time on calls might seem good on paper, but if nothing substantive happened during those calls, the metric did not reflect real success.
How Can KPIs Be Made More Meaningful?
Good KPIs track questions like, “Are we solving problems? Are we making things better? Are we creating value?”
Here is what strong KPIs should include:
- A clear connection to an outcome that matters, not just a task.
- Simplicity. If you need a paragraph to explain it, it is too complicated.
- Relevance to the employee’s actual work, not just top-level goals.
- A way to track quality as well as quantity.
If the goal is to improve customer loyalty, measure customer retention or first-call resolution, not just call volume.
What Are Examples Of Useful KPIs?
Instead of “number of meetings held,” track “decisions made per meeting.”
Instead of “calls answered,” track “percentage of issues resolved on first call.”
Instead of “emails sent,” track “client satisfaction following major communications.”
These kinds of KPIs show whether the work is making a difference, not just getting done.
How KPIs Can Capture Curiosity And Innovation
Most KPIs focus on measuring how much work gets done, but some of the biggest drivers of success come from curiosity and innovation. Organizations can create stronger results by tracking how people explore new ideas, adapt to feedback, and improve systems over time.
Examples of curiosity-driven KPIs include:
- How many new ideas are tested in a real-world setting, not just suggested?
- How often feedback from customers, employees, or leaders leads to actual changes?
- How many small improvements are made to products, services, or internal processes?
Tracking these types of KPIs encourages employees to stay curious, take action on feedback, and keep improving the way they work. It reminds everyone that finding better ways to do things is part of the job, not something extra added on top.
Should KPIs Ever Change?
They should, because goals shift, customer needs evolve, and teams grow. KPIs must keep up. It is good to review them at least twice a year. Look at what is still relevant, what is outdated, and what needs a fresh approach. Leaders should make KPI discussions part of normal business, not a one-time event.
What Are Some Common Mistakes To Avoid When Using KPIs?
One mistake is confusing activity with achievement. Just because someone is busy does not mean they are making progress. Tracking how many meetings a team holds, for example, does not show whether important decisions are being made.
Another mistake is trying to measure everything. Dozens of KPIs overwhelm people. It is better to focus on a few critical ones that truly matter.
A third mistake is keeping employees out of the process. If employees do not know how they are being measured, they cannot be expected to improve.
Finally, leaders should not rely solely on employees to set their own goals without connecting them to broader business priorities. At one company where I worked, we were asked to create our own goals each year. At the end of the year, my boss would ask how well I thought I had achieved them. If I said I had, he gave me a high score, and my salary increased more than usual. It seemed great at the time, but without leadership guidance or strong KPIs tied to those goals, it did not lead to better performance. It only rewarded self-assessment, not real progress.
While my own experiences showed how KPIs can go wrong, many HR leaders I have interviewed have shared powerful examples of how KPIs can be used the right way to drive real impact.
Lessons From HR Leaders About How KPIs Can Drive Real Impact
In my interviews with senior HR leaders through the Global Mentor Network, many shared examples of how metrics must be tied to what really matters to employees and the organization. Tracy Ting, CHRO of Encore Capital Group, discussed how her team distilled ten different sets of values into three simple, powerful ideas: We care, we find a better way, and we are inclusive and collaborative. She emphasized that values should connect with the heart as much as the head, and Encore uses specific metrics to measure how those values show up across global employee engagement and ESG initiatives.
Other leaders echoed a similar theme. Livia Freudl of Varian emphasized the importance of encouraging curiosity and empathy across cultures, suggesting that growth-focused KPIs could help surface new perspectives and reduce bias. Megan Burkhart of Comerica talked about reimagining career development and benefits to match changing employee expectations, where retention and leadership development became key performance signals. Together, these insights point to a bigger shift: meaningful KPIs reflect values, guide growth, and help organizations adapt to what matters most.
What Is The First Step Toward Better KPIs?
Start with clarity. Make sure every KPI has a clear purpose, a specific owner, and a clear link to bigger goals. Ask employees whether the metrics make sense to them. If not, revise them. Next, check for blind spots. Are there important parts of the job that are not being measured? Are some KPIs encouraging the wrong behaviors? And most importantly, make sure the KPIs reflect the real work people are doing, not an idealized version of it. When KPIs help people succeed instead of just keeping score, performance improves across the board. Strong KPIs create the space for better conversations, smarter decisions, and more meaningful results.