Organizational Key Performance Indicator (KPI) Measure

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A Organizational Key Performance Indicator (KPI) Measure is an organizational performance indicator that is used to determine strategic initiatives.



  • (Wikipedia, 2020) ⇒ Retrieved:2020-11-2.
    • A performance indicator or key performance indicator (KPI) is a type of performance measurement. KPIs evaluate the success of an organization or of a particular activity (such as projects, programs, products and other initiatives) in which it engages. Often success is simply the repeated, periodic achievement of some levels of operational goal (e.g. zero defects, 10/10 customer satisfaction), and sometimes success is defined in terms of making progress toward strategic goals. [1] Accordingly, choosing the right KPIs relies upon a good understanding of what is important to the organization. What is deemed important often depends on the department measuring the performance – e.g. the KPIs useful to finance will differ from the KPIs assigned to sales.

      Since there is a need to understand well what is important, various techniques to assess the present state of the business, and its key activities, are associated with the selection of performance indicators. These assessments often lead to the identification of potential improvements, so performance indicators are routinely associated with 'performance improvement' initiatives. A very common way to choose KPIs is to apply a management framework such as the balanced scorecard.


  • (Wikipedia, 2020) ⇒ Retrieved:2020-8-5.
    • Key performance indicators (KPIs) are ways to periodically assess the performances of organizations, business units, and their division, departments and employees. Accordingly, KPIs are most commonly defined in a way that is understandable, meaningful, and measurable. They are rarely defined in such a way that their fulfillment would be hampered by factors seen as non-controllable by the organizations or individuals responsible. Such KPIs are usually ignored by organizations.

       KPIs should follow the SMART criteria. This means the measure has a Specific purpose for the business, it is Measurable to really get a value of the KPI, the defined norms have to be Achievable, the improvement of a KPI has to be Relevant to the success of the organization, and finally it must be Time phased, which means the value or outcomes are shown for a predefined and relevant period. Key Performance Indicators: Establishing the Metrics that Guide Success, accessed 23 April 2016 </ref>

      In order to be evaluated, KPIs are linked to target values, so that the value of the measure can be assessed as meeting expectations or not.


    • QUOTE: ... High-level KPIs may focus on the overall performance of the business, while low-level KPIs may focus on processes in departments such as sales, marketing, HR, support and others. ...

      ... it is only as valuable as the action it inspires. Too often, organizations blindly adopt industry-recognized KPIs and then wonder why that KPI doesn't reflect their own business and fails to affect any positive change. ...

      ... Follow these steps when defining a KPI:

      • What is your desired outcome?
      • Why does this outcome matter?
      • How are you going to measure progress?
      • How can you influence the outcome?
      • Who is responsible for the business outcome?
      • How will you know you’ve achieved your outcome?
      • How often will you review progress towards the outcome?
    • As an example, let’s say your objective is to increase sales revenue this year. You’re going to call this your Sales Growth KPI. Here’s how you might define the KPI:
      • To increase sales revenue by 20% this year
      • Achieving this target will allow the business to become profitable
      • Progress will be measured as an increase in revenue measured in dollars spent
      • By hiring additional sales staff, by promoting existing customers to buy more product
      • The Chief Sales Officer is responsible for this metric
      • Revenue will have increased by 20% this year
      • Will be reviewed on a monthly basis


    • Combining elements of various measurement frameworks yields the measurement model below. ...
      1. CUSTOMERS: Are we satisfying our customers?
      2. STAKEHOLDERS: Are we satisfying our shareholders?
        • Financial returns to shareholders
      3. STAKEHOLDERS: Are we satisfying our other stakeholders?
        • Stakeholder satisfaction and dissatisfaction
        • Stakeholder retention and behavior
      4. STRATEGIES: What is happening to our customer base?
        • Market potential
        • Market growth rate
      5. STRATEGIES: Is our company strategy working?
      6. STRATEGIES: Are our individual strategies being properly executed?
        • Strategic goals and the objectives necessary to achieve them.
      7. OPERATIONS: Are we serving our customers and stakeholders effectively?
        • Product and service quality
      8. OPERATIONS: Are we operating efficiently?
        • Process quality and capability
        • Productivity
        • Waste
        • Product and service costs
      9. STAKEHOLDER CONTRIBUTIONS: Are stakeholders contributing what they should?
        • Stakeholder resource contribution
        • Stakeholder contribution quality
      10. CAPABILITIES: Are we developing the abilities we need to ; execute our strategies?
        • Organizational capabilities
        • Infrastructure capabilities
        • Stakeholder capabilities




    • Key performance indicators define a set of values used to measure against. These raw sets of values, which are fed to systems in charge of summarizing the information, are called indicators. Indicators identifiable and marked as possible candidates for KPIs can be summarized into the following sub-categories:
      • Quantitative indicators which can be presented with a number.
      • Qualitative indicators which can't be presented as a number.
      • Leading indicators which can predict the future outcome of a process
      • Lagging indicators which present the success or failure post hoc
      • Input indicators which measure the amount of resources consumed during the generation of the outcome
      • Process indicators which represent the efficiency or the productivity of the process
      • Output indicators which reflect the outcome or results of the process activities
      • Practical indicators that interface with existing company processes.
      • Directional indicators specifying whether an organization is getting better or not.
      • Actionable indicators are sufficiently in an organization's control to affect change.
      • Financial indicators used in performance measurement and when looking at an operating index.
    • Key performance indicators, in practical terms and for strategic development, are objectives to be targeted that will add the most value to the business.[2] These are also referred to as 'key success indicators'.
  1. Key Performance Indicators – What Are Key Performance Indicators or KPI
  2. Pursuit of Performance Excellence: Business Success through Effective Plant Operations Metrics. A MESA Metrics Research Study. February 2012




  • (Bauer, 2004) ⇒ Kent Bauer. (2004). “KPIs-The Metrics That Drive Performance Management.” Information Management 14, no. 9
    • QUOTE: Although selection of the appropriate visuals and graphs contribute to the effectiveness of a business performance management (BPM) dashboard, the true "soul" of the dashboard is the key performance indicators (KPIs). KPIs measure the business health of the enterprise and ensure that all individuals at all levels are "marching in step" to the same goals and strategies. They also provide the focal point for enterprise-wide standardization, collaboration and coordination. In this column and in subsequent months, we will discuss the important role of KPIs in the performance management process, provide guidelines for choosing the most appropriate and meaningful KPIs, and leverage Six Sigma techniques to facilitate KPI development and prioritization.

      Selecting and defining KPIs is not as easy as it sounds. In the current marketplace, any time you purchase business intelligence (BI), enterprise resource planning (ERP), supply chain management (SCM), customer relationship management (CRM) or business performance management (BPM) systems, you have the dilemma of choosing 15 to 20 KPIs from the several hundred (or thousand) metrics that are included in the package. How do you differentiate KPIs from "just" plain ordinary metrics? How do you ensure the selected metrics are critical business drivers? How do you validate that the selected metrics lead to enterprise rather than localized optimization? How do you balance the short- and long-term goals? Do you have the available data to support the metrics?

      In our quest to answer these questions, let's start our KPI journey with a basic definition. KPIs are quantifiable metrics which reflect the performance of an organization in achieving its goals and objectives. KPIs reflect strategic value drivers rather than just measuring non-critical business activities and processes. KPIs align all levels of an organization (business units, departments and individuals) with clearly defined and cascaded targets and benchmarks...