KPIs: How Many Is Too Many? And How Few Is Too Few?
If you’ve ever walked into a meeting room and seen a wall full of Red-Amber-Green (or RAG) status KPIs, you might have wondered: is that really helping anyone?
On the flip side, if your leadership team is only tracking one or two numbers, they might be missing critical warning signs until it’s too late.
So what’s the sweet spot? How many KPIs does a business actually need? And—more importantly—how do you make them useful?
What is a KPI?
A Key Performance Indicator (KPI) does what it says on the tin – it is an important indicator of performance. In other words, it’s a small set of critical measures that give you an accurate health check on your business or function.
If things are going well in your KPIs, you can be confident that everything else is likely on track.
If something is off? It’s a red flag that needs further attention – and it signals this early enough so you can take action to compensate for the issue.
The problem? Getting the right KPIs is crucial. They need to show you enough information in advance of a major problem, cover the key elements of your business, and be few enough they are easy to understand and be on top of.
Most businesses fail to find a sweet spot: they either track…
- way too many KPIs – so many they get lost in a sea of numbers, making it impossible to focus on the ones that matter.
- far too few – which don’t tend to show the early warning signs that something’s wrong. (These tend to be end of process outcome focused e.g. monthly turnover & profit).
So, let’s get specific.
How Many KPIs Should You Have?
This is tricky to set as a hard rule because, on one hand, it depends on the complexity of your business, the number of critical variables affecting performance, and how you’ve structured your team.
On the other hand, the biggest limiting factor isn’t the business—it’s us.
As humans, we have a finite capacity for tracking and making sense of multiple data points. Research by George A. Miller (“The Magical Number Seven, Plus or Minus Two”) suggests that, on average, we can hold 5-9 pieces of information in our working memory at any given time. More recent studies refine this further, indicating that our real working memory capacity is closer to 4 ± 1 items (Cowan, 2010).
This has major implications for KPIs. If a leadership team is tracking too many, they risk drowning in data rather than gaining clarity from it. Instead of overloading the system, we’re better off designing an environment where each level of leadership works within this cognitive bandwidth—keeping KPIs in the 4-9 range, with 5-7 being widely considered optimal (APQC, 2021).
A Rule of Thumb for Structuring KPIs
This doesn’t mean a business should have just 5-7 KPIs total and leave it at that. KPIs should cascade—not stack up randomly.
For an SLT or CEO to monitor 5-7 top-level KPIs, the individual business areas will likely have their own 5-7 KPIs that feed into one or two of those overarching business KPIs. And within those business areas, departments may track 5-7 KPIs that contribute towards those.
For example:
- For the CEO & Board – 5-7 top-level KPIs should give a clear overall business health check.
- For a Senior Leader – 5-7 function-level KPIs that track how their area is performing (which, in turn, feed into the company’s top KPIs).
- For a Team or Department – 5-7 KPIs to focus on what actually drives success at their level, supporting the leader’s KPIs.
But Don’t Get Carried Away
Just because 5-7 KPIs per level is a good benchmark this doesn’t mean every individual needs their own personal set.
In fact, doing so can create rigid thinking—where individuals become too focused on their metrics rather than what actually moves the needle for the team or business.
KPIs should cascade, not multiply.
If everyone has their own set of metrics, you risk:
🚩 Siloed priorities – Individuals chase their own numbers rather than contributing to the broader team objectives.
🚩 Lack of agility – When priorities shift, people may resist redeployment because they’re focused on hitting “their” KPI rather than what’s actually needed.
🚩 Overcomplication – Instead of clarity, you get an avalanche of metrics that distract from real performance.
The reality is, business needs evolve; a developer’s priority this sprint might not be about shipping new features—it might be about fixing critical bugs affecting customer retention. A marketer’s best use of time this month might not be on lead generation but on improving conversion rates. Their work should flex based on what will move the team’s KPIs, not just their personal targets.
Bringing It All Together
The best KPIs aren’t just numbers on a dashboard—they’re decision-making tools. The right KPIs give leaders confidence in where to focus and where to let the team run. They provide clarity without clutter and direction without rigidity.
If you take one thing away from this: Less is more. Tracking 5-7 meaningful KPIs per level gives your business a clear focus without overwhelming decision-making. And if your team is drowning in a sea of metrics? It’s time to step back and reassess what truly drives performance.
So, are you tracking the right things? Or just tracking everything?
If you’re unsure, let’s chat. I help business leaders design KPIs that actually work for their business —helping you cut through the noise, spot the real drivers of success, and build a system that keeps your business on track.
⬇️ Book a call in below, and let’s make your KPIs count ⬇️
