Key Performance Indicators (KPI)

Key Performance Indicators (KPI) are financial and non-financial measures used to quantify objectives that reflect the performance of an organisation against key objectives. KPI’s are used in budgeting systems to assess the current state of the key business drivers of the organisation so that management can take mid-course corrections.

Key benefits of using KPI’s as the key driving metrics in measuring performance are:

1. KPI’s are linked to an organisation’s strategic and tactical objectives. Continuous monitoring of KPI’s permits management to measure progress and take corrective actions relevant to the success of the firms strategies
2. KPI’s can be used to link performance management tools and techniques like scorecards (see third generation scorecards below) and in the design of Key Result areas (see below).