Key performance indicators - what are they?

Key performance indicators (English. Key Performance Indicators , KPI) – financial and non -financial indicators, used as measures to measure degree, in which the goals of the organization are achieved. KPI support the achievement of the operating and strategic goals of the company. They are of great importance for building organizational culture, focused on the result, since they provide employees with objective feedback on work, costs and quality. Kpi are also a tool for managerial control, allows you to quickly make decisions, plan and arrange priorities and respond to emerging problems. Also supports continuous improvement processes and the efficient use of resources, available in the organization.

KPI – This is a tool, which the, among other things, used in economical management and budget execution . Methods for determining and using KPI are indicated in the ISO standard 22400 .

The effective KPI program in the company should comply with the following conditions:

• The number of indicators should not exceed 20 (The purpose of the KPI program – Do not measure everything, and create an effective tool for monitoring and managing the results).
• KPI, selected for the program, should take into account the most important processes / Functional areas of the company; financial indicators should be in the minority.
• Each indicator should have a specific numerical goal for this year. The starting point should be the results, reached by the organization in previous periods, and a comparative analysis of the best similar organizations in the sector.
• The goals should be raised in subsequent periods, which stimulates the activities of constant improvement.
• It is necessary to exclude indicators, who can "compete" with each other (eg, The cost of stocks of finished products and timeliness / completeness of supplies to the consumer in a production company).
• Only those indicators should be chosen, the results of which are actually influenced by employees.