Performance indicators differ with business drivers and aims (or goals). A school might consider the failure rate of its students as a Key Performance Indicator which might help the school understand its position in the educational community, whereas a business might consider the percentage of income from return customers as a potential KPI.
But it is necessary for an organization to at least identify its KPI's. The key environment for identifying KPI's are:
- Having a pre-defined business process.
- Having clear goals/performance requirements for the business processes.
- Having a quantitative/qualitative measurement of the results and comparison with set goals.
- Investigating variances and tweaking processes or resources to achieve short-term goals.
When identifying KPI's the acronym SMART is often applied. KPI's need to be:
- Specific
- Measurable
- Achievable
- Realistic
- Timely