Contents:
- What is a KPI?
- How to define a KPI
- How to improve a KPI
- Indicators
- Key Leading Indicator (KLI)
- Key Performance Measure (KPM)
- Measure vs. metric
- Credits and links
KPI examples:
- Finance
- Business process
- Ecommerce
- Efficiency
- Compliance
- Service level agreements (SLAs)
- Service quality
- Programmers
- DevOps
- Kanban
A key performance indicator (KPI) is a type of performance measurement.
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A KPI evaluates the success of an organization or activity.
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Choosing the right KPIs needs good understanding of what is important to the organization.
Success examples:
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Repeated periodic achievement of an operational goal, such as 100% customer satistfaction, or zero defects, etc.
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Making progress toward strategic goals.
Wikipedia pages:
Our related guides that use KPIs:
To define a KPI, you can cover these areas:
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Title: use an exact name to avoid ambiguity
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Objective: the relation of the indicator with the organizational objectives must be clear
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Scope: state the areas of business and/or parts of the organization that are included and/or excluded.
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Target: Benchmarks must be determined in order to monitor progress
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Formula: the exact calculation of the indicator
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Units: what is/are the unit(s) of measurement in use
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Frequency: when is the indicator recorded and reported
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Data source: the exact data sources involved in calculating a indicator value
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Owner: the accountable person for the indicator
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Comments: any outstanding issues regarding the indicator
To improve a KPI, you can ask these questions:
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Does it clearly define what constitutes success?
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Does it clearly relate to a strategic objective and key result (OKR)?
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Does it provide the information required to set SMART goals?
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Does it accurately portray progress and probability of achieving both long-term strategic objectives and near-term milestones?
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Does it identify the root causes of barriers?
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Does it focus the organization on the priority improvement needs?
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Does it drive the behavior and actions required to achieve the objectives?
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Does it align work with value?
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Quantitative indicators: can be presented with a number.
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Qualitative indicators: can't be presented as a number.
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Leading indicators: predict the outcome of a process
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Lagging indicators: present the success or failure post hoc
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Input indicators: measure the amount of resources consumed during the generation of the outcome
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Process indicators: represent the efficiency or the productivity of the process
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Output indicators: reflect the outcome or results of the process activities
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Practical indicators: interface with existing company processes.
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Directional indicators: specifying how something is changing, such as getting better or worse.
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Actionable indicators: sufficiently in an organization's control to effect change.
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Financial indicators: used in performance measurement and when looking at an operating index.
A Key Leading Indicator (KLI) is a KPI that tends to show up earliest.
A Key Performance Measure (KPM) is how you measure a KPI.
There is overlap between a measure and a metric.
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A measure is concrete, usually measure one thing, and are quantitative in nature (e.g. I have five apples).
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A metric describe a quality and require a measurement baseline (I have five more apples than I did yesterday).
Examples:
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A measure can be useful for demonstrating workloads and activity
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A metric can be useful for evaluating compliance, processes effectiveness, and measuring success against established objectives.