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Tacettin İKİZ



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Key Performance Indicators (KPI)

Started by Tacettin İKİZ, December 14, 2024, 12:56:01 PM

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Tacettin İKİZ

December 14, 2024, 12:56:01 PM
Key Performance Indicators (KPI)

Characteristics of good KPIs: 
SMART: Specific, Measurable, Achievable, Relevant, Time-phased


What is a KPI? 
  • A KPI measures activities that lead to achieving a specified business objective.
  • Tracks progress toward strategic goals.
  • Includes quantitative (numerical) and qualitative (descriptive) measures.
  • Shows performance trends and benchmarks results against standards or competitors.


Metrics vs. KPIs 
  • Metrics: Monitor business activity aspects at specific points in time.
  • KPIs: Evaluate strategic objectives against specific targets.

Key Difference: All KPIs are metrics, but not all metrics are KPIs.

Examples: 
MetricsKPIs
Operating Budget CostPercentage of Budget Variance
Number of Working Hours per YearOperating Costs
Number of EmployeesPercentage of Employee Turnover


Types of Performance Measures 
  • Key Result Indicators (KRI): Tell you how you have done in a perspective.
  • Performance Indicators (PI): Tell you what to do.
  • Key Performance Indicators (KPI): Tell you what to do to dramatically improve performance.


KPI Typology 

  • Leading KPI: Measures actions affecting future outcomes.
  • Lagging KPI: Looks at past performance.
  • Quantitative KPI: Based on numbers and statistics.
  • Qualitative KPI: Descriptive data from interviews, focus groups, etc.
  • Efficiency KPI: Measures resource efficiency (time, cost, effort).
  • Effectiveness KPI: Evaluates whether desired outcomes are achieved.


KPI Identification Process 

  • What to Assess? Example: Process performance or effectiveness.
  • Identify Variables: Example: Defect counts, cycle times, attrition rates.
  • Generate Relevant Data:
  • Set Target Values: Use benchmarks or customer expectations.
  • Determine KPI Frequency: Avoid too frequent or rare measurements.


KPI Selection Criteria 

A Good KPI Must Be: 
  • Relevant: Aligns with organizational goals and strategy.
  • Specific: Focused and clear.
  • Measurable: Quantified or tracked qualitatively.
  • Attainable: Achievable under realistic conditions.
  • Timely: Achievable within a defined timeframe.


Key Takeaways 

  • KPIs measure success toward achieving business objectives.
  • Metrics provide general insights, but KPIs focus on strategic goals.
  • Effective KPIs are SMART and tailored to organizational priorities.
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