Key Performance Indicator (KPI) Examples Defined

What is a KPI?

A Key Performance Indicator (KPI) may be a metric that’s wont to quantify progress towards important business objectives. High-level KPIs measure the general performance of a corporation, while low-level KPIs specialises in measuring the impact of tasks and projects led by individuals teams like marketing, sales, customer service, or IT.

 

Key Performance Indicators (KPIs) help businesses turn high-level goals into actionable tasks with measurable results.

A common high-level goal is something like this: “Increase company revenue by 20% this year.” And while that’s a great goal to strive for, it fails to tell individual departments and team members what actionable steps they can take to help the company reach that goal.

Business operating system(KPI) :

 

In the term of business operating system refers to standard, enterprise-wide collection of business processes used in many diversified industrial companies. The definition has also extended to include the common structure, principles and practices necessary to drive the organization.
Diversified industrial companies like Ingersoll Rand, Honeywell, and Danaher have adopted a standard, common collection of business processes and/or business process improvement methodologies which they use to manage strategy development and execution. In case of Danaher, the business system is core part of the company’s culture, is seen as one of the key drivers of corporate performance, and is therefore a differentiator for shareholders and prospective employees.

 

Key Performance Indicator (KPI) :

 

 

Key Performance Indicator may be a measurable value that demonstrates how effectively a corporation is achieving key business objectives. Organization use KPIs at multiple levels to evaluate their success at reaching targets. High-level KPIs may focus on the overall performance of the business, while low-level KPIs may focus on processes in departments such as sales, marketing, HR, support and others.

 

What Makes A KPI Effective? :

 

What Makes A KPI Effective? :

Now we know KPI stands for key performance indicators it is only as valuable as the action it inspires. Too often organizattions blindly adopt industry-recognized KPIs and then wonder why that KPI doesn’t reflect their own business and fails to affect any positive change. One the most important, but often overlooked, aspects of KPIs is that they are a form of communication. As such, they abide by the same rule and best-practices as any other form of communication. Succinct, clear and relevant information is much likely to be absorbed and acted upon.
In terms of developing a strategy for formulating KPIs, your team should start with the basics and understand what your organizational objectives are, how you plan on achieving them, and who can act on this information. This should be iterative process that involves feedback from analysts, department heads and managers. As this fact-finding mission unfold, you will gain a better understanding of which business processes need to be measured with a KPI dashboard and with whom that information should be shared.

How to write and develop KPIs

 

When writing or developing KPI, you need to consider how that KPI relates to a specific business outcome or objective. KPIs need to customized to your business situation and should be developed to help you achieve your goals. Follow these steps when writing a KPI.
Using KPIs as part of your performance management frameworks:-
The most common elements between most performance management frameworks are setting objectives, measuring performance, and managing all related activities.

Components of Your Business Operating SystemIt is important to create each BOS component to be scalable, up or down, for future growth or contraction. The components are interrelated as with any living system. Therefore, the successful leader addresses all components and understand how they affect each other.

A description of five components is presented in priority order for effectively creating your BOS.

1. Processes
2. Systems
3. Roles
4. Skills
5. Structure.

Examples of business operating systems
Toyota’s Toyota Production System (TPS) is one of the earliest examples, developed between 1948 and 1975
Danaher is well known for its Danaher Business System (DBS)
Fortive (a company that split from Danaher in 2016) has the Fortive Business System (FBS) which is derived from the DBS

GET YOUR BUSINESS UNDER CONTROL

 

Many company choose to develop their own operating system, or cobble together parts of various systems. Usually results are mixed, and improvement is somewhat limited.
Other companies find single time-tested and proven operating system that yields tremendous results they never dreamed were possible. For thousands of successful companies, the Entrepreneurial Operating System is that solution.
PrimaPlus helps the leadership team clarify, simplify, and achieve their vision faster. It is the mechanism that ensures everyone in the organization is aligned with the company vision and plan. PrimaPlus establishes a common set of rules with clear accountability, so that you have the right people in the right seats, consistently delivering the work you’re counting on them to do.

 

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