KPIs vary between companies and industries, depending on their priorities or performance criteria.
Why Use KPI’s
Also referred to as "key success indicators KSI ". For the accuracy, actual reflection of the process, efficacy in delivering the outcome.
The effects of a change can be monitored reliably, repeatedly and accurately by KPI. KPIs have to provide the answers to our most important questions.
KPIs should be primarily designed to empower employees and provide them with the relevant information to learn.
Identify what makes the organization success or failures. Controllable and accountable. Qualitative and quantitative. Long term and short term.
Consider Stakeholder needs. Identify important aspects.
How to Develop Key Performance Indicators
Select Performance Indicators and Metrics. Set Targets and Track Performance. Examples - Days to deliver an order. Input KPIs - measure assets and resources invested in or used to generate business results. Examples - Dollars spent on research and development, Funding for employee training, Quality of raw materials.
A Real-world Example of KPI Usage
Output KPIs - measure the financial and nonfinancial results of business activities. Examples — Revenues. Leading KPI measure activities that have a significant effect on future performance.
Lagging KPI is a type of indicator that reflect the success or failure after an event has been consumed. Such as most financial KPIs, measure the output of past activity.
Outcome KPI - Reflects overall results or impact of the business activity in terms of generated benefits, as a quantification of performance.
Examples are customer retention, brand awareness. Qualitative KPI - A descriptive characteristic, an opinion, a property or a trait.
Edit a KPI
Examples are employee satisfaction through surveys which gives a qualitative report. Quantitative KPI - A measurable characteristic, resulted by counting, adding, or averaging numbers. Quantitative data is most common in measurement and therefore forms the backbone of most KPIs.
A KPI are decided by the management. They are the leading indicators of performance desired by the organization.
Doran Management Review, and popularized by Peter Drucker. Procurement and suppliers.