indicator (KPI) is a business metric for evaluating factors that are
crucial to the success of an organization. The purpose of using KPIs is
to focus attention on the tasks and processes that management has
determined are most important for making progress towards declared goals
KPIs differ per organization. For example, a KPI for a
public company may be its stock price while a KPI in government might be
a low unemployment rate. KPIs will also differ for roles people play in
the same organization. For example, a Chief Executive Officer (CEO) might
consider profitability as the most important KPI, while a sales team
manager in the same company might consider successful service level
agreement (SLA) delivery numbers as the most important KPI. Because KPIs often gauge abstract targets such as user
experience or job ticket turnaround effectiveness, identifying useful
KPIs can be challenging. The selection of appropriate KPIs depends, in
part, on the organization's ability to actually measure the indicators. Typically
a management team will gather requirements and analyze correlations
between metrics, but in the end, they must put the KPIs in practice and
observe what behaviors the KPIs encourage. Once KPIs have been determined, management must
continually refine the indicators to ensure they reinforce each other and
do not cause conflicting priorities. In addition to being quantifiable,
all KPIs should be well-defined and communicated clearly. Each KPI should
support the level above it so that all levels of the organization are
working together towards the same strategic goals. Although monitoring KPIs can help management identify
deficiencies within an organization, it is up to management to decide how
to correct them. Having too many KPIs can be problematic. It not only
dilutes employee attention, it also makes it difficult for managers to
prioritize indicators and make sure the key indicators get the attention
To that end, many
successful companies limit KPI scope to small sets of indicators that
evaluate the success of individuals in the organization. A common
approach is to:
Identify which three to five key performance
indicators (KPIs) that should be tracked for each employee role or
line of business (LOB).
Implement automated tools to collect data and
present KPIs to company management in a balanced scorecard,
performance scorecard or executive dashboard.
Evaluate how well the employee or LOB is making
progress towards the organization's strategic business goals.
Re-evaluate how well the KPIs are supporting
current business goals.
Make adjustments as needed.
===================================================================== Good Netiquette And A Green Internet To All!
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the past twenty-five years, I have enjoyed a dynamic and successful
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