Question

Elements Key performance indicator (KPI)

Answer 1

KPI (KEY PERFORMANCE INDICATOR):

A Key Performance Indicator (KPI) is a type of measure that is used to evaluate the performance of an organization against its strategic objectives. KPIs help to cut the complexity associated with performance tracking by reducing a large amount of measures into a practical number of 'key' indicators.

Elements of KPIs :-

• Quantitative aspects of the KPI such as actual, target, and best performance
• KPI card with description, owner, data source, frequency, intention, thresholds, and much more
• Charts showing the visual performance history across time
• Analysis that shows the build-up of data or metrics from which the KPI is derived – this is often displayed via “drill down” capabilities
• Benchmarks to see show how an entity is performing compared to competition (or as compared to internal benchmarks)
• Written assessments from the KPI owners as they evaluate performance
• Corrective actions to get back on track if performance has deviated
• Initiatives to improve performance and reach the defined target set for the KPI
• Value driver trees, if the KPI is part of a value driver model
• Governance rules – what will happen if KPI is not performing? Will there be notifications, processes to initiate escalations, approvals?
• Analytics – what has caused the current performance level? You should be able to explore and analyze the performance as well as perform “what if’s” and conduct even more analysis to gain knowledge on where resources should be allocated to improve performance
• Risk factors and risk mitigation plans – every KPI can be subject to unexpected risks. What are they? What can we do to mitigate the risk factors, if they occur?

Linkages to overall business context – no KPI stands alone. It is a part of a larger context, such as a process or a part of a strategy.

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