Key Performance Indicators, KPI
KPI (Key Performance Indicators) are performance indicators of a unit (enterprise) that help the organization in achieving strategic and tactical (operational) goals. The use of key performance indicators gives the company the opportunity to assess its current status and help assess the success of the implementation of the chosen strategy.
KPI allows controlling the business activity of employees, departments, and the company as a whole.
With the help of KPI, you can create a perfect and effective system of motivation and incentives for company employees. Therefore, KPI and staff motivation have become inseparable concepts.
Depending on the company's strategy, there are different KPIs. Basically, they are used to determine the performance of administrative and management personnel.
Key performance indicators can be divided into:
- lagging – reflect the results of activities after the period;
- leading – provide an opportunity to manage the situation within the reporting period in order to achieve the desired results after it expires.
The lagging ones include financial performance. By their very nature, they cannot describe the current performance of departments and the company as a whole.
The operational (leading) indicators allow evaluating the current activities of departments and the company as a whole, simultaneously and indirectly answering questions about which cash flows can exist in the future as well as the quality of processes and products, the degree of customer satisfaction, etc.
As a result of the introduction of KPI, the following positive results can be obtained:
- Improving the efficiency of the enterprise.
- The description of the main factors and indicators on which the success of the enterprise depends.
- Planning from goals (top-down planning), and not from the achieved indicators and existing opportunities (bottom-up planning).
- The development of realistic standards.
- The transparent assessment of staff performance.
KPI can be useful not only to the management of the enterprise. Focusing on them is convenient for ordinary employees, especially for those whose income is directly dependent on the results of activities.
KPI modules are part of such solutions offered by IT-Enterprise, such as Sales (Key performance indicators of sales), R&D (Production preparation key performance indicators), Personnel (Personnel motivation based on the KPI), Workflow and BPM (Document flow and business processes key performance indicators), etc.