| Business KPI or business key performance indicators | | | | the over all company may limit itself to three or four |
| are also known as key success indicators (KSI) are | | | | key performance indicators to reflect progress toward |
| created for the purpose of measuring and defining the | | | | reaching the company goal, subdivisions or |
| progress of the organization toward reaching its stated | | | | departments--even the company's geographic units |
| goals. When a business goes through the process of | | | | can also select a separate goal along with three or |
| analyzing its mission, naming those who have a stake | | | | four key performance indicators. These goals are not |
| in the mission and stating its goals, the business then | | | | required to be the same as the company goal, |
| ready to define how it will measure the progress | | | | although they should not be at cross purposes. |
| toward reaching the goals. These measurements are | | | | The key performance indicators must be |
| known as key performance indicators. | | | | predetermined. It's a worthless exercise to set a goal |
| Several characteristics of key performance indicators | | | | which has already been reached just to say the goal |
| are important to keep in mind in selecting them | | | | has been met. By the same token, if the business is |
| First, key performance indicators are not goals, they | | | | not going to be able to tell if they met the goal or not, |
| are simply a quantifiable measurement agreed upon in | | | | it's also a futile exercise. Both the goal which is central |
| advance that indicates whether or not a business is | | | | to the company desires and the way to signal |
| making progress toward its goals. This is why it is | | | | whether progress toward the goal is happening should |
| important to determine the goals before setting the | | | | be jointly determined and identified before the start of |
| key performance indicators. For example, an | | | | the period. |
| organization may have a goal to be the most | | | | Finally, although goals may be more narrowly defined |
| profitable business in the niche which it represents. In | | | | as the company progresses toward successful |
| this instance, the key performance indicators will be | | | | attainment of the goal, business key performance |
| factors that include financial and profit measurements. | | | | indicators should not change significantly during the life |
| Good key performance indicators when the goal has | | | | of the progress toward the goal. If measures are |
| to do with profit would be Shareholder Equity or | | | | agreed upon in advance as being representative of |
| Pre-tax profit. However, 'cost of sales' would not be a | | | | true progress, there should be no need to change |
| good key performance indicator because it does not | | | | those measures. |
| portray a way to measure the goal of the business. | | | | To set out in clear language what the desired goal will |
| Next, a business should not select more than three or | | | | be and to apply milestone markers along the way |
| four key performance indicators at any one time. The | | | | toward that goal is a unifying factor in almost any |
| underlying concept here is to keep the attention | | | | organization. |
| focused on the measurements. However, even though | | | | |