HR management

What are key performance indicators (KPI)?

1. Definition of key performance indicators (KPI)

A key performance indicator is a financial and non-financial measure used to measure progress towards a stated organizational goal or objective.

2. The benefits of measuring Key Performance Indicators

• It can be a very quick way of seeing the actual performance of a goal or strategic objective.
• Decisions can be made much quicker when there are accurate and visible measures to back them up.
• Can allow management to see the company or department performance in one place.
• A team can work together to a common set of measurable goals.

3. Characteristics of KPI

• KPI is always connected with the corporate goals.
• A KPI is decided by the middle or top management.
• It belongs to an individual who is accountable for its outcome.
• A KPI leads to action.
• Few in number.
• They are leading indicators of performance desired by the organization.
• Easy to understand.
• It should be balanced not undermine each other.
• Users can gauge their progress overtime.
• KPI’s loses its value overtime so they must be periodically reviewed and refreshed.

4. Condition of KPI:

• Specific.
• Measurable.
• Achievable.
• Result-oriented or Relevant.
• Time-bound.

5. Related documents

• Sample KPI (all KPI for marketing, sales, HR, manufacturing …)
• What are key result areas

Author: Davi Ngo, hrvinet.com

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