Tuesday 8 January 2019

Key performance indicators (KPI) | Major Performance Indicators

A Key Performance Indicators or KPIS with abbreviated is one type of performance measurement used to measure how well a company/organization, projects, work unit, Department or individual goals and strategic objectives that have been established. Management of the company in General using Key Performance Indicators (KPIS) to track and analyze the factors that are considered essential for the success of the organization.

With Key Performance Indicators or KPIS, company management or stakeholders (stakeholders) can understand what the organization or work unit in question are in line to reach the goals set. Key Performance Indicators in the also called the major Performance Indicators (IKU). Key Performance Indicators are often referred to with the Key Success Indicators or with abbreviated KSI.

KPIS or Key Performance Indicators is a measurement that is quantitative and reflect factors that are the key to the success of an organization. In General, the indicators are defined and measured in a KPI is an agreement of all the parties concerned. Indicators are measured and target KPIS on each organization varies, depending on the nature and strategy of the organization.

For example, one of the primary performance indicators or KPI to a public company (public corporation) is the stock price and the amount of the dividend will be distributed to the shareholders while the KPI for startup companies is the addition of the number of subscribers or the growth of sales of the product. The essence of the KPI are set targets and ways that can be measured to assess progress toward the target is specified.

Understanding KPI (Key Performance Indicator) according to experts

Below is the definition or understanding Key Performance Indicator according to the experts.

  • A key performance indicator is a measure that is quantitative and staged for the company as well as having a variety of perspectives and based on concrete data, and be the starting point for determining the goals and strategy of the organization.

  • The key performance indicator is a measurement that assesses how an organization execute its strategic vision. The intended strategic vision refers to how the strategy of the Organization interactively integrated in the strategies of the Organization as a whole.

  • Defining Key Performance Indicators as the most critical to the success of the Organization on the conditions now and in the future.

  • The key performance indicator is a quantitative measure of scale and used to evaluate the performance of the Organization in the purpose of achieving the targets the organization. KPIS are also used to determine objectively measurable, see trends, and supporting decision making.

Types of Key Performance Indicator (performance indicators)

Basically, the main performance indicators or KPIS can be distinguished into two types namely KPI Financial and Non-Financial KPIS.

Key Performance Indicators Financial

KPI Financial is a major performance indicators related to finance. Examples of this include Financial KPIS were as follows:

  • KPI gross profit. The i.e. a KPI to measure the amount of money remaining from revenues after deducting cost of goods sold (HPP).

  • The KPI net profit. The i.e. a KPI to measure the amount of money remaining from revenues after deducting cost of goods sold and other business costs such as interest charges and tax.

  • Gross Profit Margin KPI. That is the percentage value of the KPI measure obtain by dividing gross profit by revenue.

  • A KPI Margin net profit. That is a percentage of the value of the KPI measure obtain by dividing the net profit based on its revenue.

  • KPI current ratio.The KPI that measures the financial performance balance liquidity with allot of current assets (current assets) and current liabilities (current liabilities).

Each of the main performance indicators (Key Performance Indicators) is effectively answering specific questions. As in the example KPIS a KPI, current ratio this effectively answers the question. How fast we change our business smoothly assets into cash to pay short-term obligations.  This indicator predicts how well a business will survive if the decline unexpectedly. The second example on the gross profit Margin KPI. The KPI is able to answer questions such as "How Luckily a business" or "How efficient production process".

Key Performance Indicator Non-financial

Non-financial KPIS are the KPIS that do not directly affect the finances of a company. Some examples of Non-financial KPIS is such of them as:

  • Rotation of Manpower (Manpower Turnover)

  • Metrics customer satisfaction (Customer Satisfaction metrics)

  • The ratio of New Customers against a repeat customer (Repeat Customer to New Customer Ratio)

  • Market Share (Market Share)

Develop Key Performance Indicators key performance indicators or right

Develop a major Performance Indicators requires time and resources of the company. The main performance indicators to be measure are indicators. That correspond to the needs of the company taking into account the strategies and short-term goals of the company.

For example, if our company increased sales by satisfying the company's profitability. But not enough to provide funds for business growth. Then the KPIS that are most certainly for our company is the net profit Margin KPI and Profit Margins Dirty. On one hand, if profitability in accordance with expectations. But the growth is not as fast as expected then we can consider some non-financial KPIS. Such as KPIS, KPI Labor Turnover customer satisfaction or Customer Ratio Returning towards new customers.

Examples of Indicators KPIS on the Organization

As mentioned earlier, each organization or company has its own Indicator to assess the success of the organization or his company. The following are some examples of KPI indicators for organizations in different sectors of the industry.

  • School, performance indicators are measured is the rate of graduation of its students.

  • Property companies, performance indicators are measure is the level of property sales.

  • For Manufacturing Companies, examples of performance indicators. That are measure as the amount of Output produced in a given month. The timeliness of the delivery of finished goods to customers.

  • For the company's start-up applications, performance indicators are measure is the sum of the number of applications and users download the application.

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