Key performance indicators can be presented in any combination of reports, spreadsheets, or charts.
In simple terms, key performance indicators (KPIs) are measures of achievement, tools used by organizations to track their progress and success in achieving the organization’s purpose. They consist of a set of predetermined measurable objectives for an organization and can involve any aspect of an organization that is considered vital to its success. To create effective KPIs, an organization must have a mission with clearly defined goals and objectives. Vague goals, like being the best in the industry, for example, don’t work because they’re too broad. The objectives must be expressed in measurable terms and agreed upon by those involved in the organization.
Key performance indicators can be presented in any combination of reports, spreadsheets, or charts. They provide a real-time, visual snapshot of the strength of a company or organization based on specific, pre-defined measures. The display method varies as it largely depends on the objective to be measured and your target audience.
These measures vary from one organization to another, depending on the type of business and its objectives, and can be financial or non-financial. For example, a trucking company might use a comparison of the number of trucking accidents involving its drivers that occurred by distance traveled to the national average. This would be a way to track your security record. An emergency medical care center could use the average wait time for patients to be treated by time of day, which would allow them to determine if adjustments in staffing or training levels are desirable.
In the same way, a company that drives sales might use the percentage of new customers referred by existing customers as a key performance indicator. The same sales company may also use a percentage comparison of the current year’s profits to the previous year’s profits with a target of a specific percentage each year.
Once a KPI is defined, it is rarely changed unless the organization’s actual goals change. In fact, to be useful, it is very important that these goals consistently maintain the same definition year after year, so that the organization’s progress can be effectively monitored. In this way, business practices and/or strategic planning can be re-examined if there is a slowdown in progress towards defined goals.