KPIs in Business Organizations

Key Performance Index (KPI) refers to quantifiable activities for measuring how well business companies perform regarding their strategic objectives and goals. KPIs simply provide the most critical information concerning the performance of[G1] [G2] [G3] [G4] [G5] [G6] [G7] [G8] [G9] [G10] [G11] the organization, and it is this information that enables them or their stakeholders to understand the track record of the company regarding the stated objectives. Therefore, KPIs if well designed is quite essential instruments for business organizations, and gives the actual picture of the level of the current performance by the company, and whether the business has achieved [G12] [G13] its goals or not.  Besides, KPIs are useful in decision making for organizations by the reduction of the complex nature of big organizational performance to organizations that can be managed on various indicators.

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There are various types of KPIs based on the metrics for the company. For instance, there are financial metrics which include the cost of the goods the company sold, profit, LOB revenue versus the target, cost, LOB Expenses versus the company’s budget and sales by region. Customer metrics which include the lifetime value of the customers, customer retention and satisfaction, the acquisition cost for customers, score for the net promoter, and the number of the company’s customers.  Process metrics include a range of the product defects, customer support tickets, and LOB efficiency measure. People metrics include the turnover rate for the employees, employee satisfaction and percentage of the company’s response to open positions. People metrics comprises the retirement rate, external hires versus internal promotions, acquired knowledge from training, the ratio  for salary competitiveness. Customer metrics include the rate of customer churn, customers with higher satisfaction, contact volume of the company by channel, repeat site visits versus new visits[G33] [G34] [G35] [G36] [G37] [G38] [G39] [G40] [G41] [G42] [G43] [G44] [G45] [G46] [G47] [G48] [G49] [G50] [G51] [G52] [G53] t (Parmenter 23). [G54] [G55] [G56] [G57] [G58] [G59] [G60] [G61] [G62] [G63] [G64] [G65] [G66] [G67] [G68] [G69] [G70] [G71]

Not all KPIs are equally important for the score of the total performance by the business companies. A better example is a pair of ‘the fast rate of customer resolution’ and ‘time to answer

(Parmenter 26).  It is more important for a company to quickly respond to a customer’s query or respond with a meaningful answer rather than taking too long to give an excellent response.

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It is crucial for every business company to track KPIs [G83] [G84] to enable them to measure

the target, it ensures creation a healthy atmosphere for learning within the company, it provides essential information, encourages accountability within the company, and boosts the morale of the company’s employees (Parmenter 31).

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Work Cited

Parmenter, David. Key Performance Indicators: Developing, Implementing, and Using Winning KPIs. John Wiley & Sons, 2015.  Page 21-32

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