Perhaps you are wondering how companies and individuals can know that the work is progressing on the right track and with the required quality and the set goals? There is an indicator called KPI that determines the success of the companies’ work and whether the set goals were achieved or not? What is this indicator?
Performance indicators or as it is known as KPI, which is an abbreviation of “Key Performance indicators”. It refers to a set of measures used in companies by the company’s CEO and other managers and clarifies the quality of the business and how effective the company is in achieving the required goals.
Where is the importance of performance indicators in modern business?
First: The importance of performance indicators lies in the fact that they highlight business performance in companies. Without these indicators, it is difficult for company managers to evaluate and follow-up on the business.
Second: Through KPI, customer requirements are met.
Third: It provides the company’s CEO with future results, and accordingly it is dealt with in the proper ways to achieve the required goal.
Fourth: Through performance indicators, deficiencies are identified and appropriate solutions are found.
Fifth: Defining performance indicators from the methods used to improve performance to achieve the required quality.
Do performance indicators have types or are they limited to a specific type?
There are ten main types used to KPI, including:
- Efficiency indicators
- Effectiveness indicators
- Value indicators
- Competitive indicators
- Capacity indicators
- Productivity indicators
- Quality indicators
- Effectiveness indicators
- Profitability indicators
Examples of KPI Performance Indicators!
Each section has examples that are listed below, for example:
- Management includes Sales target, the ratio of operating expenses, and ret
- Strategic goals and successful business indicators.
- Measurement duration.
- Unit of measurement.
Interpretation of the results.
- urns on assets.
- Finance includes The ratio of operating expenses, the ratio of operating profit margin, and the percentage of gross profit margin.
- Sales include sales growth, sales goal, and the number of sales opportunities.
- Marketing includes Participation rate, monthly site traffic, and the number of potential customers.
- Human resources include Overtime, training costs, and staff productivity.
- Service and support include Customer satisfaction, customer retention, and service level.
- Procurement includes supplier availability, number of suppliers, and lower cost of purchases.
- Information technology includes return on investment, server downtime, and accuracy estimates.
What steps should we consider when setting up a KPI?
How do we deal with KPI?
Indicators should be public rather than confidential, and all employees should be involved and integrated into indicators, and then reviewed in sequence on indicators, then it is necessary to ensure that indicators are up to date.
The indicators and their measurement are not related only to the financial aspects. The company’s relationships with customers and employees are extremely important to achieve the desired goal and come up with the planned high quality.
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