Key Performance Indicators
Key Performance Indicators are indicators that are both financial and non-financial in nature and are used to measure the performance of an organization. They assess the present condition of a business and help decide on an appropriate course of action. Key performance indicators (KPIs) are helpful in quantifying activities that are usually difficult to measure, such as service, satisfaction, and leadership. They are closely linked to an organization’s overall strategy.
Depending on the nature of the organization and its strategy, the KPIs will differ. They are vital in measuring the achievement of organizational goals, particularly in sectors that are difficult to quantify. Key performance indicators measure quantities against a predefined set of values. These sets of values are called indicators. The indicators can be classified into the following categories:
i) Quantitative indicators: These are values that can be represented as numerical values.
ii) Practical indicators: These are values that are used to interface with the processes within the company.
iii) Directional indicators: These are indicators that are used to measure the direction the organization is taking.
iv) Actionable indicators: These are indicators on which an organization can initiate change.
Key Performance Area
Key = crucial/main
Performance = achievement/attainment
Area = space/range/field of operation
KEY PERFORMANCE AREA = Main achievement space
Point to Note
- KPA is the overall scope of activities that an individual in a job role has to perform.
- KPA is not always result-focused.
- KPAs can be inclusive of KRAs.
In organizations, each role or job has a “Job Description (JD)” which consists of all the responsibilities the person on the job has to perform. All the activities listed in the JD fall into two categories:
- Category A: List of functions and activities crucial or critical for the job role. These activities form the KRA of the job.
- Category B: List of functions and activities associated with the job role but not truly critical for the role. These functions are important for the overall performance of the team, department, or organization as a whole and form the KPA for the job.
For Example:
Role – Product Manager
Goal – Ensuring delivery of quality product within schedule.
Key Performance Areas
1. Maintaining good working conditions in the plant.
2. Optimum resource utilization.
3. Process improvement.
4. Safety and prevention planning and control.
5. Working within the company’s SLA (Service Level Agreement) and GRC (Governance, Risk Management, and Compliance) policies.
Regards,
Amit