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<!-- * browser: key-performance-indicator * tracker: f44c30d1b876f8987cf78c727e573542 * version: 5.0.0 * updated: 2018-02-24T03:07:25Z * contact: Joel Parker Henderson (http://joelparkerhenderson.com) * options: commentable -->Key Performance Indicator (KPI)
<img src="README.png" alt="Key Performance Indicator" style="width: 100%;"/>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
- The 7 habits of highly effective KPI users
- Credits and links
Examples:
- KPI examples for business
- KPI examples for compliance
- KPI examples for devops
- KPI examples for ecommerce
- KPI examples for efficiency
- KPI examples for finance
- Examples
- KPI examples for kanban
- KPI examples for programmers
- KPI examples for service level agreements (SLAs)
- KPI examples for service quality
- KPI examples for value stream map (VSM) areas
What is a KPI?
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:
How to define a KPI
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
How to improve a KPI
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?
Indicators
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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.
Key Leading Indicator (KLI)
A Key Leading Indicator (KLI) is a KPI that tends to show up earliest.
Key Performance Measure (KPM)
A Key Performance Measure (KPM) is how you measure a KPI.
Measure vs. metric
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.
The 7 habits of highly effective KPI users
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<b>KPIs help lead as well as manage.</b> KPIs are more than just “numbers to hit”, they are metrics that help leaders anticipate the future and develop informed business plans.
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<b>KPIs align the organization.</b> Selecting the right KPIs gets everyone in the organization on the same page, with both people and processes aligned to better serve customers’ needs.
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<b>KPIs provide an integrated view of the customer.</b> Framing KPIs around awareness and anticipation of customer needs enables firms to engage customers at various touchpoints.
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<b>KPI components inform decision-making.</b> Organizations with the capability to analyze KPI data in real-time are better positioned to adjust priorities than organizations that can only conduct a retrospective analysis.
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<b>KPI data is shared across business units.</b> Success depends on cross-functional collaboration. Data visibility plays an important part in this collaboration, as managers need to see how their actions impact KPIs.
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<b>KPIs aren’t allowed to proliferate indiscriminately.</b> There is no “magic number” of KPIs, but fewer is generally better: focus on KPIs that drive business growth, such as 3 enterprise KPIs and 3 functional KPIs.
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<b>KPIs serve as data sets for machine learning.</b> KPIs can “teach” machine learning models in order to improve performance over time. This allows models to input transactional data, then solve for long-term values.