What is a KPI ?
A KPI (Key Performance Indicator) also called KSI (Key Success Indicator) is a financial or non financial measurement used to evaluate the progress toward an predefined organizational goal. Once an organization has analyzed its mission, identified all the participants and defined its objectives and goals, it is necessary to implement the evaluation of the progress made toward this accomplishment.
KPIs are quantifiable, validated, related to the company’s key success factors measurements.
They are different according to the organizations. A salesman will have among his KPIs the percentage of his revenue generated through loyal customers. An university will focus on its graduation rate. A logistics manager will manage his activity using among others KPIs, the customer service level and its impact on the company working capital requirement. A finance manager will drive the company investments with the ROI ratio….
Whatever which indicators are chosen by the company, they reflect its objectives.
Efficient Key Performance Indicators must be established with a long term purpose. Their formula should not evolute in a significant way (it could distort the historical analysis). It is the goal that must reach the KPI that has to change according to the organization strategic decisions.