What is a Key Performance Indicator (KPI)?

what is indicator

What are Key Performance Indicators (KPIs)?

KPIs help us to measure how well companies, business units, projects or individuals are performing compared to their strategic goals and objectives. Well-designed KPIs provide the vital navigation instruments that give us a clear understanding of current levels of performance.

KPIs as navigation tools

Just like on an ocean-liner, where the captain and crew need navigation data to understand where they are relative to their planned sailing route. Indicators like GPS location data, speed, fuel levels, or weather information allow the team in charge to make decisions about where to steer next.

This is exactly the same for companies or government organisations. Here, KPIs are the vital navigation tools that managers use to understand whether the business is on a successful voyage or whether it is veering off the prosperous path. The right set of KPIs will shine light on the key aspects of performance and highlight areas that may need attention. Without the right set of KPIs managers are sailing blind.

The problem with selecting the right KPIs

The trouble is that there are 1000s of KPIs to choose from and companies find it hard to select the right ones for their business. Managers mostly struggle to identify the vital few management metrics and instead collect and report a vast amount of everything that is easy to measure or simply pick the KPIs everyone else seems to be using. The other extreme is where companies, business units, project team or individuals have little or no KPIs to understand their performance levels.

Our research finds that less than 10% of all the metrics that are collected, analysed and reported in businesses are ever used to inform decision-making. 90% of the metrics are wasted, or worse, used to drown people in data while they are thirsting for insights.

KPIs as key decision-making tools

Effective decision-makers and managers understand that they need information on the key dimensions of performance and that this can be achieved by distilling them into the vital KPIs. Similarly to the way a doctor would go about trying to understand someone's health. Instead of measuring random things a doctor would focus on key health measures first, such as body mass index, cholesterol levels, blood pressure, and sugar levels.

In our organisations, the most effective KPIs are closely tied to strategic objectives and help to answer the most critical business questions. A good starting point is therefore to identify the questions that the decision-makers, managers or external stakeholders need to have an answer to. One or two so-called Key Performance Questions (KPQs) should be identified for each strategic objective.

Once the most important business questions have been articulated it then allows companies to select or develop the right KPIs that best help answer them. That way all KPIs will be strategic, relevant and meaningful.

To learn more about KPIs and metrics browse our free KPI library, read our books. articles and case studies or get in touch if you would like to discuss our KPI consulting or training services.

Every organisation, business unit, project or individual needs performance indicators to monitor and improve what they do. Key Performance Indicators (KPIs) are the vital navigation instruments that help them understand whether they are on a successful journey or not. The right set of KPIs will pinpoint current performance levels and shine light on areas that need attention. Without the right set of KPIs everyone is flying blind.

Here at the Advanced Performance Institute we specialise in helping organisations - across all sizes and industries, public or private - develop and use KPIs. As the world-leading KPI consulting organisation we pride ourselves at taking the pain out of anyone’s KPI challenge by developing relevant and meaningful KPIs for anything, even the most difficult and intangible areas of performance.

We help clients with designing, analysing, visualising, reporting and using performance information so they get the insights they need to dive their business forward. All of our consulting engagements are customised to the exact needs of our clients but typical assignments include:

  • Developing complete corporate KPI frameworks for companies, including for many of the best-known blue chip companies across the globe.
  • Developing outcome-based performance frameworks for governments, government departments and public sector bodies.
  • Creating insightful scorecards and dashboards to monitor corporate performance or specific business areas (e.g. finance, customer, operations, quality, staff, IT, supply chain, etc.)
  • Making anything measurable and developing sets of KPIs for even the most difficult to measure areas of performance (e.g. government policy implementations, marketing effectiveness, customer life-time value, supplier relationships, corporate brand image and reputation, predicting financial performance, impact of charities, regulatory compliance, human capital, staff engagement, clinical trials, etc.)
  • Evaluating and optimising existing performance measurement approaches.
  • Helping organisations to develop meaningful targets and benchmarks for their KPIs.
  • Setting up best-practice qualitative and quantitative data collection systems for KPIs (including automated data collection, surveys, focus-groups, contextualised observations, 360-degree assessments, peer reviews, mystery shopping, big data, etc.)
  • Helping organisations with analysing KPI data (including impact analysis, time lag analysis, business experiments or cause-and-effect analysis, etc.)
  • Developing best-practice data visualisations and charts to effectively communicate insights from the KPIs and performance data.
  • Helping clients select the most appropriate KPI, dashboard or score-carding software solutions.
  • Assisting clients with putting in place processes and creating the right culture so that KPIs are used to inform fact-based decision-making and performance improvement.
  • Providing in-company training and coaching on performance measurement, KPIs, data analysis and evidence-based management.

We have been fortunate enough to help many of the world’s best-known companies and government organisations measure and manage their performance. Based on that vast experience we have created many best-practice approaches that will allow us to address your KPI and metrics issues in a fast and cost effective manner. Simply get in touch to explore how we might be able to help you.

Here at the Advanced Performance Institute we specialise in the design and delivery of in-company training on KPIs, metrics and performance measurement as well as the delivery of keynote presentation on the topic. Our training and speaking engagements can be completely customised for any expertise level (from the complete novice to the data scientist community), audience size and to the exact needs of our clients.

Our main keynote speaker is Bernard Marr who is globally recognised as one of the world’s leading experts on KPIs, metrics and performance measurement. Bernard has delivered thought-provoking, engaging and entertaining keynote speeches at many major national and international conferences, software company user events, at leading business schools as well as at numerous events for client companies and industry bodies.

Our training can be delivered in different formats, from more formal lecture style to very interactive and facilitated workshop sessions that address many of the actual measurement issues in client organisations. Each of our workshops and training sessions can also include certifications.

Content examples of our Big Data training include:

  • Key Performance Indicators – Masterclass – with a complete overview of how to measure and manage performance in organisations.
  • Current global best practice in measuring and managing performance.
  • Measuring and managing performance using the Balanced Scorecard (including strategy maps, the four perspectives, KPIs, aligned projects, and implementation best practice).
  • How to develop the vital set of relevant and meaningful KPIs.
  • How to measure anything and everything.
  • How to create a strategic performance framework.
  • How to measure financial performance – a best practice overview.
  • How to measure people and HR performance – a best practice overview.
  • How to measure operational performance – a best practice overview.
  • How to measure marketing and sales performance – a best practice overview.
  • Best practice performance measurement in your industry.
  • Creating an evidence-based management culture in which KPIs are used to improve every-day decision-making and company performance.
  • How to effectively analyse performance information.
  • How to best communicate and report performance data to inform strategic decision-making.
  • Aligning and cascading KPIs throughout the organisation.
  • Aligning performance indicators with risk indicators.

We have been fortunate enough to train many of the world’s best-known companies and government organisations, as well as small and medium sized companies across all sectors and industries on the development and use of KPIs and metrics. We would love to discuss your training needs in more detail. Simply get in touch to explore how we might be able to help you.

Here at the Advanced Performance Institute we conduct internationally recognised research with the aim of understanding and disseminating the latest trends and best practices in the field of KPIs and metrics.

We conduct research and best practice reviews to produce articles, reports, white papers, case studies and books covering all key topical areas linked to metrics and KPIs. Our research outcomes include:

  • Global studies
  • Country studies
  • Industry specific studies
  • Market research studies
  • Thought leadership white papers
  • Sponsored books and reports
  • Sponsored in-depth case studies

We have conducted some of the world's largest and most influential research in the field. Many of our studies and publications are supported by and jointly published with corporate sponsors such as leading software firms or industry bodies. All our research is academically rigorous commercial research that is foremost of practical relevance to its readers.

We have been fortunate enough to produce and co-develop research studies and reports for many world-class organisations. We would love to discuss your performance measurement research needs in more detail. Simply get in touch to explore how we might be able to help you.

Source: www.ap-institute.com

Category: Forex

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