Key Performance Indicators

Key performance indicators are measures of business performance. They are used to check performance against targets, or as benchmarks to signal areas of performance in need of improvement. They are, therefore, measures of business’s Critical Success Factors.

In any enterprise there may be dozens of CSFs and literally hundreds of KPIs to track their performance. Which ones are significant for any particular business at any particular time depends on what the business is planning to achieve and what its current situation is.

How you decide on which KPIs to track and act on depends on:

• Industry Knowledge: What are the numbers that must be on track in a particular industry and where does the business under review rate with regard to industry averages? What is happening in the industry that will have an effect on the business?

• Business Plan Objectives: A business plan based on a strategic planning exercise will provide the key objectives for the next planning period and so determine which CSFs to focus on.

• Targeting Selected Drivers:  Since it is unusual that all the drivers of any one CSF can be acted on at once it is necessary to decide which to concentrate on to achieve the stated objective.  For example, increasing the customer satisfaction score could involve a range of drivers such as greater contact, reduced delivery errors, better installation procedures, and product design improvement. These become your KPIs for measuring how the process is going.