Page 71 - Paulisms: Gold Nuggets for Small Business

3.2 Key Performance Indicators (KPIs)
A Key Performance Indicator (KPI) is a type of performance measurement which evaluates the success or activity of a company, process, product or a person in which it engages.
Often success is simply the repeated, periodic achievement of some level of operational goal (e.g. 65% closure rate).
Choosing the right KPIs relies on a good understanding of what is important to the organisation. And what is deemed important often depends on the department measuring the performance. For example, the KPIs useful to finance will differ from the KPIs assigned to sales.
These assessments often lead to the identification of potential improvements, so performance indicators are routinely associated with ‘performance improvement’ initiatives.
KPIs are like Simple Rules, but Simple Rules are used before decisions are made and to help make decisions; set the parameters. KPIs are tools to evaluate historically how you are progressing against the company goals; performance criteria and decisions are made as a result of the performance data (if need be).
An example of the use of KPIs is using them as a tool to monitor a network’s performance by writing into an agreement that performance criteria are as per the company’s current KPIs. A person’s performance can be monitored by writing into an agreement that performance criteria are as per the company’s current KPIs. Performance criteria could be updated by simply updating current KPIs without needing to adjust any agreement.