Key Performance Indicators (KPIs) – also called Key Success Indicators (KSIs) – are quantifiable measures that a company or industry uses to gauge and compare performance in terms of meeting their strategic and operational goals. KPIs vary between companies and industries, depending on their priorities or performance criteria.

Benefits of KPIs

• Performance effectiveness
• Accuracy, a reflection of the process, efficacy in delivering the outcome
• Effects of change can be monitored reliably, repeatedly, and accurately

How to Design KPIs

• Should be clearly linked to the strategy
• Must provide the answers to the most important questions
• Should be primarily designed to empower and provide those working on the project with the relevant information to learn.

KPIs are usually developed following the S.M.A.R.T. criteria, originally created by George T Doran:

• Specific
• Measurable
• Attainable
• Result-oriented or Relevant
• Time-bound

Identification of KPIs

• Related to strategic aims
• Identify what makes the organizations succeed or fail
• Controllable and accountable
• Qualitative and quantitative
• Long-term and short term
• Consider stakeholder needs
• Identify important aspects
• Establish company goals
• Select performance indicators and metrics
• Set targets and track performance

Types of KPIs

• Process KPI – measures the efficiency or productivity of a business process, i.e days to deliver an order.
• Input KPI – measures assets and resources invested in or used to generate business results, i.e., expenses from research and development, costs of employee training, quality of raw materials.
• Output KPI – measures the financial and nonfinancial results of business activities, i.e. revenue.
• Leading KPI – measures activities that have a significant effect on future performance.
• Lagging KPI – a type of indicator that reflect the success or failure after an event has been consumed. Most financial KPIs, measure the output of past activity.
• Outcome KPI – reflects overall results or impact of the business activity in terms of generated benefits, as a quantification of performance, i.e. customer retention, brand awareness.
• Qualitative KPI – a descriptive characteristic, an opinion, a property, or a trait. i.e. employee satisfaction.
• Quantitative KPI – a measurable characteristic, resulted by counting, adding, or averaging numbers.