Key Performance Indicators
September 24, 2010What are they? How many different types are there? Which one do you choose? Over the next few weeks we’ll be answering all these questions in our KPI Blog Series.
As this is the first edition to the series, it only makes sense to start with what exactly these things are. A KPI (key performance indicator) is a measure reflecting how a company is doing in a specific aspect of its performance. A KPI is one representation of a critical success factor (CSF)—a key activity needed to achieve a given strategic objective. Organizations that measure performance identify the handful of critical success factors that comprise every strategic objective.
For example, depending on a company’s strategy, the organization might have a KPI for the percentage of income the organization derives from international markets. Another KPI might be the number of customer complaints about orders filled incorrectly. Some organizations use many KPIs, for all their different areas of operation. Other enterprises’ KPIs may focus on a specific area. For instance, a social service nonprofit may focus all its KPIs on the amount of aid that is granted to different entities.
Typically, each unit within a company also has a set of KPIs that support the company’s goals. Performance data for a unit’s KPIs can be rolled up into the company’s KPIs to reflect total organizational performance in any given area being measured.
You probably won’t participate in developing KPIs at the corporate level. However, you may be involved in creating KPIs at your unit’s level—especially if your unit was recently acquired or has been associated with a new product, process, department, or line of reporting. Regardless of your situation, you should be aware of the KPIs that are in place in your organization. With this awareness, you can measure your and your group’s progress towards corporate and unit goals.
