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The Traffic Light System

KPI status colors work like traffic lights: green means go (everything’s fine), yellow means caution (watch out), and red means stop (take action). This visual system lets you assess process health at a glance.
Color-coding makes it easy to spot problems quickly without reading through numbers and reports. Your eyes naturally go to red, alerting you to what needs attention.

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The Three Colors

Green

Meeting or exceeding targetPerformance is where it should be

Yellow

Warning zoneNot yet critical, but attention needed

Red

Below acceptable levelImmediate action required

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How Status Is Determined

The system automatically assigns a color when you record an actual value. It is not based on manual thresholds. The “Status Preview” is calculated based on:
  1. Your recorded “Actual Value”
  2. Your “Target Goal”
  3. Your “What indicates success?” setting (whether higher or lower is better)
The system calculates how close your actual value is to the goal and assigns a color.

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Status for “Lower Is Better” Metrics

For metrics where smaller numbers are better (like response time or error rate):
1

Green Status

Value is at or below targetYou’re meeting or exceeding your goal.Example: First Response Time
  • Target Goal: 2 hours
  • Recorded: 1.5 hours
  • Status: Green
Keep up the good work!
2

Yellow Status

Value is above target but in the warning zonePerformance is slipping but not yet critical.Example: First Response Time
  • Target Goal: 2 hours
  • Recorded: 2.7 hours
  • Status: Yellow
Pay attention. Trend toward red if nothing changes.
3

Red Status

Value is significantly above targetPerformance is unacceptable. Action required.Example: First Response Time
  • Target Goal: 2 hours
  • Recorded: 4.2 hours
  • Status: Red
Investigate immediately and take corrective action.

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Status for “Higher Is Better” Metrics

For metrics where larger numbers are better (like satisfaction scores or sales):
1

Green Status

Value is at or above targetYou’re meeting or exceeding your goal.Example: Customer Satisfaction Score
  • Target Goal: 4.5 out of 5
  • Recorded: 4.7
  • Status: Green
Excellent performance!
2

Yellow Status

Value is below target but in the warning zonePerformance is declining but recoverable.Example: Customer Satisfaction Score
  • Target Goal: 4.5
  • Recorded: 4.2
  • Status: Yellow
Need improvement to reach target.
3

Red Status

Value is significantly below targetPerformance is critically low. Urgent action needed.Example: Customer Satisfaction Score
  • Target Goal: 4.5
  • Recorded: 3.8
  • Status: Red
Customers are dissatisfied. Address immediately.

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Understanding Team Scorecards

When you have multiple KPIs, you’ll see them together in a scorecard or dashboard:

All Green

All KPIs in green zoneMeaning: Process is performing well across all dimensionsAction:
  • Maintain current practices
  • Document what’s working
  • Consider raising targets for continuous improvement
One or more KPIs in yellow zoneMeaning: Process is mostly healthy but needs attention in specific areasAction:
  • Monitor yellows closely
  • Identify why those metrics are slipping
  • Implement corrective actions
One or more KPIs in red zoneMeaning: Process has serious issues requiring immediate actionAction:
  • Investigate root cause of reds immediately
  • Implement fixes as top priority
  • Communicate to stakeholders
Don’t just look at current color. Look at the trend:
  • Improving Trend
  • Declining Trend
  • Stable
  • Volatile
Colors moving from red → yellow → greenGreat news! Your process improvements are working.Action:
  • Document what you changed
  • Sustain the improvements
  • Share lessons learned
Example timeline:
  • Month 1: Red (4.5 hrs)
  • Month 2: Yellow (2.8 hrs)
  • Month 3: Green (1.9 hrs)

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What to Do for Each Color

Green

Actions:
  • Continue current practices
  • Document what works
  • Share with team
  • Consider stretch goals
Frequency: Review weekly

Yellow

Actions:
  • Monitor closely
  • Identify causes
  • Plan improvements
  • Prevent decline to red
Frequency: Review daily

Red

Actions:
  • Investigate immediately
  • Take corrective action
  • Communicate to team
  • Escalate if needed
Frequency: Review multiple times daily

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Communicating with Colors

Colors make communication faster and clearer:
  • Executive Reports
  • Team Meetings
  • Email Updates
“Customer Support is Green across all metrics. Sales is Green except for conversion rate which is Yellow and improving. Operations has one Red KPI (fulfillment time) which we’re actively addressing.”Executives get the full picture in seconds.

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Visual Dashboard Example

A typical KPI dashboard might look like:
KPICurrent ValueTargetStatusTrend
First Response Time1.8 hrs2 hrsGreenImproving
Resolution Time6.2 hrs8 hrsGreenStable
Customer Satisfaction4.34.5YellowDeclining
Ticket Backlog4530RedWorsening
First Contact Resolution78%80%YellowImproving
At a glance, you know:
  • Two metrics are performing well
  • Two need attention
  • One requires immediate action
  • Trends show which way things are heading

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Tips for Success

Review Regularly

Check status daily for critical KPIs, weekly for others. Colors are only useful if you look at them.

Act on Reds

Red status must trigger action, every time. If you ignore reds, the system loses value.

Don't Ignore Yellows

Yellows are warnings. Address them before they become reds.

Celebrate Greens

Acknowledge when the team achieves green status. Positive reinforcement matters.

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Next Steps

Recording KPI Values

Learn how to track values that generate these colors

Creating KPIs

Create KPIs with proper thresholds

What Are KPIs?

Review KPI fundamentals