What is a Key Performance Indicator?
Key Performance Indicators are both financial and non-financial metrics used to help an organization ensure and measure progress against an organization's targets. KPI acts as an intelligence agency of a business that takes into account the current condition of a business and ensures action against the condition. KPIs are often used to account for hard-to-measure activities such as leadership development benefits, agreements, services, and satisfaction.
Types of KPIs( Key Performance Indicator):
1. Financial Key Performance Indicator.
This Financial KPI is the main work marker related to finance.
2. Key Performance Indicator Non-Financial
It is a KPI that does not directly affect a company's finances.
Requirements for building KPI creation:
1. Always related to the target or target
In the implementation, KPI is always related to the target or target to be achieved or achieved, so that the goal of making KPI can be planned and structured when you have set targets or goals first. If there are no goals to be achieved, why are there KPIs because none are measured? Therefore, a KPI cannot be instantly emerged and used without being linked to a performance target that must or will be achieved.
2. Must be measurable
Key Performance Indicators must be measurable and can be calculated so that it can be quantified as a source for leadership decision-making. A leader must be able to when decision making is tried or when the decision is postponed first. By looking at what percentage is measurable and accurately reach the target or not.
3. Must have a comparison from the previous period
With the comparison of the previous period, the leadership should be able to formulate what the industry must try to overcome or achieve the targets that have been set. Each KPI must have a comparison or standard as the "benchmark". If it can be obtained" benchmark that is thought to be acceptable as" standard for industrial zones linked" should be better.
4. There is Evidence
obtain facts or dimensions of KPIs that are the result of calculating and equalizing appropriately. Generally, the facts or dimensions of large industry KPIs are ready to be published to the public aimed at bringing in new investors to be able to reach the target or target of the KPI.
5. Tied To Time
In the implementation, KPI must have an association with the time that has been determined. The subject has functioned so that the implementation can run in the match with the agreed time