Other Performance Measures
There are four types of performance measures −
Key Performance Indicators (KPIs) says what to do to increase performance dramatically.
Key Result Indicators (KRIs) offer an overview of the past performance. They communicate how management has done in a CSF or from a balanced scorecard perspective.
Performance Indicators (PIs) provide an idea to the staff and the management what to do.
Result Indicators (RIs) say about what the staff have done.
Key Performance Indicators (KPIs)
KPIs are a set of measures that focus on the aspects of organizational performance that are most needed for current and future success of the organization. There are a few KPIs in an organization (no more than ten), and they have certain characteristics.
Characteristics of KPIs −
- They are non-financial process of measures
- They are done frequently
- They are introduced by the CEO and the senior management
- They are recognizable by the staff
- They are an individuals’ responsibility
- They affect the organization significantly
- They also have a positive influence on other measures
Key Result Indicators (KRIs)
KRIs are performance measures different from KPIs. KRIs include −
- Customer satisfaction
- Net profit before tax
- Profitability of customers
- Employee satisfaction
- Return on capital employed
Performance Indicators and Result Indicators
About 80 performance measures falling in between KRIs and KPIs are performance indicators and result indicators (PIs and RIs).
The performance indicators are important but they are not the key to the business. The PIs propel teams to align themselves to the organization’s strategy. PIs, in fact, complement the KPIs and they are shown with KPIs on the organization, department and team scorecards.
Following are some PIs −
- Percentage increase in sales to the top 10% of customers
- Number of employees' suggestions implemented in the last 30 days
- Customer complaints from key customers
- Sales calls organized for the next one to two weeks
- Late deliveries to key customers
Following are some RIs −
- Net profit on key product lines
- Sales made yesterday
- Week's sales to key customers
- Debtor collections in week
- Bed utilization in week
The 10/80/10 Rule of Performance Measures
An organization should have around 10 KRIs, up to 80 PIs and RIs, and 10 KPIs. No more than these are actually used, but in many cases fewer measures are enough.
