How many KPIs should a team have?

Three to seven per team or person keeps things focused.

Should I use KPIs or OKRs?

Both: KPIs for day-to-day operations, OKRs for ambitious changes and initiatives.

Key performance indicator (KPI)

💼 Business By CampusDown Wiki Editorial Team Last updated October 26, 2026

A key performance indicator (KPI) is a measurable number that shows how well an organization or individual is progressing toward a key goal.

Contents

1. History
2. How to build good KPIs
3. KPI vs OKR, and Goodhart's law
4. FAQ
5. References

History

In The Practice of Management (1954), Peter Drucker proposed management by objectives (MBO), in which managers and employees agree on measurable goals and are judged on results. In 1981 George Doran laid out the SMART criteria: goals should be specific, measurable, achievable, relevant, and time-bound. In 1992 Harvard's Robert Kaplan and David Norton introduced the balanced scorecard. It asked companies to track customer, internal-process, and learning-and-growth measures alongside financial ones. KPI systems then spread through businesses worldwide.

How to build good KPIs

KPIs are the few metrics that matter most for reaching a goal. Lagging indicators such as revenue show results but react slowly. Leading indicators, such as demo requests or trial sign-ups, signal what's coming. Typical KPIs vary by function:

Marketing: ROAS and CAC
Subscription businesses: churn and NPS
Sales: conversion rate and deal size
HR: turnover and time-to-hire

Keep it to three to seven per team so people can focus.

KPI vs OKR, and Goodhart's law

KPIs are ongoing health metrics. OKRs set ambitious objectives and key results, usually each quarter, to drive change. The two work well together. British economist Charles Goodhart warned that "when a measure becomes a target, it ceases to be a good measure." A call center judged only on short call times may hang up on customers without solving their problems. Pair efficiency KPIs with quality metrics to avoid that.

FAQ

How many KPIs should a team have?: Three to seven per team or person keeps things focused.
Should I use KPIs or OKRs?: Both: KPIs for day-to-day operations, OKRs for ambitious changes and initiatives.

Sources reviewed: 2026-10-26

References

Kaplan, R. S., & Norton, D. P. (1992). The balanced scorecard: Measures that drive performance. Harvard Business Review, 70(1), 71–79.
Doran, G. T. (1981). There's a S.M.A.R.T. way to write management's goals and objectives. Management Review, 70(11), 35–36.
Parmenter, D. (2015). Key Performance Indicators (3rd ed.). Wiley.

Reports and materials that use this theory (Korean)

There are no materials dedicated to this theory yet, but you can search related reports in the CampusDown library (Korean).

Find more reports · Search 'KPI' on CampusDown →

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This article was last updated on October 26, 2026. It is based on widely recognized original works and textbooks; when citing it in a paper, please check the original sources listed in the references.