Monday 17 December 2018

importance of Key Performance indicator (KPI) in organization

A Key Performance Indicator (KPI) is a measurable value that demonstrates how effectively a company is achieving key business objectives. Organizations use key performance indicators at multiple levels to evaluate their success at reaching targets.

"You can't manage if you cannot measure". A quote that wisely managing the workplace area associate with the importance of measuring and monitoring operational performance in a success work. Nowadays one of the effective methods and approaches have been much use. To measure the performance of corporate governance of the Organization. Including even the performance achievements in workplace area call "Key Performance Indicator (KPI)".

In the context of the management of the operational work in the field (workplace area) we couldn't really hope to improve the performance of doing better than previous attainment status unless it can measure at least some variable the key affecting major performance as a reference basis in conducting monitoring (monitoring) indicators of success against the standards that must be achieved in accordance with the vision that proclaimed.


Management responsible operational processes manage the company or organization, many still found some people confused determine what variables are important to measure consistently. So there are still many who questioned the intent and purpose of the Key Performance Indicator (KPI).

Key Performance Indicator (KPI) in Indonesia is known as "performance indicators" as a tool that is widely applied to help define and measure the progress of attainment of performance by focusing on variable-a variable target important organizations/companies/Government.

The purpose of the workplace Key Performance Indicator:

Give the form of presentation of information which is more informative and structured to find out the extent of the success achievement in performance embodies the work of set targets.

KPI is an indicator that provides information to the extent where we have made the society's work targets we set in each working group:

  • KPIS must be measurable indicators are good and systematic way.

  • Key Performance Indicator also refers to the work (the output of the work) that must be observed.

  • The measure of success should show a clear performance indicator, specific and measurable (measurable)

  • Indicators KPIS should drive increased performance rather than just monitor the performance.

  • KPI indicator can be changed along with the change of time and focus the company's strategy and vision.

  • Key Performance Indicator should be easily understood and provide feedback to the Group and manager.

  • KPI indicators should vary in each working group appropriate targets and the vision of the working group.

Define performance base management

As a performance-base management strategy, approach to the application of KPI. In the context of the workplace management. That in by the stars to develop the performance is complete through the stages of the evaluation of the achievement of short-term targets. To support status KPI achievement in the long term. Indicator the success should be measure is always adjust with the element tree. Which became a reference for a working group base on the metrics being the main target.

In its application variable metrics KPI that will be made top priority in General is associated with a menace Organization strategy on target priorities management in realizing the company's vision, for example; the application of the system of Balanced Scorecard (BSC) or Balanced score card system

Key performance indicators

The main performance indicators are an important part of the information necessary to determine and explain how the production process/service could take place from the time of time. In many company, penetrant approach to KPIS are also often used to assess the State of the currently operating and a process of determining an action against a State for repairs, including to assess activities that are difficult to measure like variable-variables related to leadership development, agreements, service, and satisfaction of customers.

Characteristics of the Key Performance Indicator in the workplace management must meet the following criteria:

  • Quantitative: presented in the form of figures by determining how well it meets operational and strategic goals set.

  • Practical: integrating with current company processes.

  • Directional: helps to determine whether the performance of a company/organization/group work is getting better or worse.

  • follow up (follow up): prevention action Initiated to generate better changes as desired.

Action monitoring any changes through KPIS is important to understand the stability of the production process and in case of incompatibility against targets target it will be very quick corrective actions enables, strategic and right on target. Application main KPI metrics as standard in the context of the management of every company workplace vary, depending on the character and the primary target of the target work group based on the strategy defined the company.

Key measurable goals

This is the cause why the KPIS are part of a key measurable targets which consists of directives, benchmarks, targets, and time frame. For example: "improve productivity and output production of 1000 units be 1200 units by the end of 2013." In this example, income amount of production according the specified time period is the KPI.

In many companies that have implemented performance measurement, results achievement obtained remain implicit, so many parties in particular those working in the area of the workplace (field) do not know the main variables that must be achieved because lost seems to only certain circles that is important to know the status of the targeted Achievers performance. This is the absence of transparency against the target company to be achieved.

Applicability in the workplace

In its application in the work area, each KPI should transparent. Which health stories in a strategic location with the use of facilities in the form of a board control (scoreboard). Display the information short and informative and present in a simple table. A graph in a form that is easily provide understanding visually. So that changes that occur from time to time with the contents of the information. Even and focus to the fact that there is going to be seening clearly and understand for anyone see it.

Companies that are implementing lean manufacturing which always highlights changes in process improvement, often use key performance indicators to measure their data.

Every company manager must know the progression changes well to understand performance indicators of the success that has been achieved or failure is caused because the emergence of problems. As such referable to immediately do the response with a finding a solution how to fix it.

Though in practice many found that the main variable in the system of Balance Scorecard. To a wider direct on four major factors. Which include; Customer, operational, Financial and Learning & Growth. In fact, to apply it in the area of operations (workplace area) much of which follows. The approach of the lean management system with focusing the elements absolute. The KPI should be monitor as a means of monitoring the activities of the production process effectively known by the QDCMS approach (Quality, Cost, Delivery, Safety and Moral) as follows;

  1. Delivery/Production 

Explain the working of the indicators associated with the volume of production in the form of planning and the achievement of the target level of production output periodically. For example, the target and realization of daily production as well as monthly.

  1. Quality

Explain the working of the indicators related to production quality in the form of planning. The achievement of targets periodically. For example, the target and realization in daily or monthly. Defects Rate, First Run Rate etc.

  1. Cost of (Productivity)

Explain the working of the indicators associate with the periodic productivity. For example, the targets and the realization of efficiency and productivity. As the productivity process products (Production productivity) in percent (%). The efficiency of production (production efficiency), the Hours people per-unit commonly known by JOPU, Overalls. Overall Equipment Effectiveness (OEE) is a very powerful indicator. To monitor the productivity of machines, people and material etc.

  1. Moral

The Moral good is an absolute aspect should be own by every employee. Because of the moral formation of good will comes down to the creation of high discipline. A moral Formation for employees need to be support by creating a work environment. For our employees in order to work with proud with loyalty is high. In order to grow trust who can develop their potential, to realize the growth of self-employees.

The moral aspect that can serve as a KPI can be monitored with the monitor status, skill & performance success that owned everyone. For example; Presence, skill matrix, training progress etc.

  1. Safety

Factor of Safety in the area of workplace are basically not only is an aspect. That is a priority but also a necessity. Every worker wants the security of a standard working environment thereby work area needs to be design. To be simple to operate, making quick work, convenient, efficient and ergonomic. Any employee in work need to anticipate and reduce the factors of the risk. Which is potential of efficient and trying to prevent work accident.

Thus the aspect of safety aspects which must be at the monitor in the form of KPIS.

However, most still help to find in many company that is very difficult to determine.  The right KPI indicators to improve the performance of its achievement. Because not understand the KPIS as well.

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