Performance indicators (PIs) are nonfinancial. These are a type of performance measurement. This kind of indicator helps companies to equalize their company's strategy. These indicators are often named Key Performance Indicators but KPIs have fundamental meaning to the organization's prosperity (D.Parmenter 2019, p.13). KPIs assess the progress of an institution or of a special activity in which it interests. Key performance indicators are the vital navigation tools used by managers to know whether their company is on a prosperous journey or whether it is swerving off the flourishing direction. The best choices of indicators will reflect enlightenment on performance and highlight sections that demand concentration. There are two of the most common proverbs used to highlight the important value of metrics. According to B.Marr ":
- What gets measured gets done
- If you can't measure it, you can't manage it
Without the right, KPIs managers are sailing blind" ( B.Marr 2014, Introduction chap.).
Performance indicators for the private sector and government
Performance indicators should include various factors. These are different depending on their areas. According to D.Parmenter: "For the private sector, performance indicators could include:
- Abandonment rate at call center - callers giving up waiting
- Late deliveries to other customers ( excluding key customers )
- Planned abandonments of reports, meetings, processes that are no longer functioning
- Number of innovations implemented by each team/division
- Sales calls organized for the next week, two weeks, and so forth
- Number of training hours booked for next month, months two and three, and months four to six - in both external and internal courses
For government and nonprofit agencies, performance indicators could also include:
- Number of media coverage events planned for next month, months two to three, and months four to six
- Date of next customer focus group
- Date of next research project into customer needs and ideas" (D.Parmenter 2019, p.13).
Methods of checking the functioning of the indicators
There are several methods to check the correctness of performance indicator system like (F.Franceschini, M.Galetto, D.Maisano 2018, p.171-172):
- Smart test is a bargain on five dimensions like specific, measurable, attainable, realistic and timely.
- The "Three criteria" test relies on checking three criteria: strategic, quantitative and qualitative.
- The Treasury Department Criteria test is based on verification: data, indicator, and measurement.
Four types can be mentioned among performance measurements and there are (D.Parmenter 2015, p.4):
- KRIs - Key result indicators show the overall result of changes taking place in the company.
- RIs - Result indicators tell supervision how the partners come together to get results.
- PIs - Performance indicators show management what groups are giving.
- KPIs - Key performance indicators show management how the company is changing during critical success determinants (D.Parmenter 2015, p.4).
- Alegre H., Baptista M.J, Cabrrera Jr E., Cubillo F., Duarte P., Hirner W., Merkel W., Parena R., (2016), Performance Indicators for Water Supply Services , IWA Publishing, United Kingdom
- Franceschini F., Galetto M., Maisano D., (2018), Designing Performance Measurement Systems: Theory and Practice of Key Performance Indicators , Springer
- Marr B., (2015), Key Performance Indicators For Dummies , John Wiley & Sons, Great Britain
- Marr B., (2014), 25 Need-To-Know Key Performance Indicators , Pearson UK, United Kingdom
- Parmenter D., (2019), Key Performance Indicators (KPI) Fourth Edition: Developing, Implementing, and Using Winning KPIs , John Wiley & Sons, New Jersey
- Parmenter D., (2015), Key Performance Indicators: Developing, Implementing, and Using Winning KPIs , John Wiley & Sons, New Jersey
- Parmenter D., (2010), Key Performance Indicators (KPI): Developing, Implementing, and Using Winning KPIs , John Wiley & Sons, New Jersey
- Wireman T., (2005), Developing Performance Indicators for Managing Maintenance , Industrial Press Inc., New York
Author: Paulina Zając