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Everything you need to know about Key Performance Indicators

by , 07 May 2015
When referring to Key Performance Indicators (KPI or Key Success Indicators), we understand they are factors that help an organisation define and measure progress toward organisational goals.


Here's something to keep in mind:

As someone working on ways to improve  organisational performance measures, I know how important it is to look for guidance and the best of  what others have done. Those looking to improve  their choice and use of key performance indicators will find thought provoking ideas and valuable examples of good practice.

Professor Sir Andrew Likierman
London Business School


A clearer definition of KPIs sees them as quantifiable measurements, agreed to beforehand, that reflect the critical success factors of an organisation.

Note that the KPIs may differ from one company to another. Management.about.com offered a few examples in this regard:

A business may have as one of its Key Performance Indicators the percentage of its income that comes from return customers.

A school may focus its Key Performance Indicators on graduation rates of its students.

A Customer Service Department may have as one of its Key Performance Indicators, in line with overall company KPIs, percentage of customer calls answered in the first minute.

A Key Performance Indicator for a social service organisation might be number of clients assisted during the year.

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Note that no matter what Key Performance Indicators you choose, it's essential that they are quantifiable.

"If a Key Performance Indicator is going to be of any value, there must be a way to accurately define and measure it. "Generate More Repeat Customers" is useless as a KPI without some way to distinguish between new and repeat customers. "Be The Most Popular Company" won't work as a KPI because there is no way to measure the company's popularity or compare it to others." -

Management.about.com


Keep in mind that as you define your KPIs, you should later relate to the same definition. In other words, for a KPI of "Increase Sales", you need to address considerations like whether to measure by units sold or by value of sales. "Will returns be deducted from sales in the month of the sale or the month of the return? Will sales be recorded for the KPI at list price or at the actual sales price?", explained our previously mentioned source.


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