by Tonia Hooper

Created on: February 19, 2010   Last Updated: February 20, 2010

Are you searching for an effective way to increase you’re company’s productivity and profitability? Consider using Key Performance Indicators (KPI) as your organization’s performance management tool.  

KPIs are quantifiable non-financial measurements that reflect the organization’s goals as a whole and have been agreed to by the team and management.  KPIs define and measure the progress of organizational, team/department, and individual goals, and should be developed after these goals and an effective action plan have been established. KPIs will differ with each business and are intended as long-term considerations.  It is important to note, however, that the KPIs selected must be in line with the organization’s main goal and objective. Every action should be a step in reaching the desired goals. 

For KPIs to be successful there must be a way to define and measure it.  Avoid vague or over-generalized goals. An organization may have a set of goals and KPIs relating to the company’s goal and long-term objective. However, individual departments or teams may find it beneficial to have their own specific goals and KPIs, keeping in line with the overall company goals; this will make achieving their team goals easier. The success derived from goal setting can be increased by “cascading” and aligning goals across multiple owners and departments, which creates shared accountability. 

A Balance Scorecard is one way of tracking the progress of KPIs.  By using a Balanced Scorecard to measure performance management, your organization will be better able to base key strategic decisions regarding internal and external resources. The implementation of KPIs and use of a Balanced Scorecard usually contain the following four processes: 

The company translates its corporate vision into measureable operational goals that are communicated to all employees; These goals are linked to individual and departmental performance goals which are assessed periodically; Internal procedures are established to meet, and hopefully exceed, the organizational goals; and By analyzing the KPIs, management will be better equipped to make recommendations on performance improvements. 

By implementing the KPIs and the Balance Scorecard methodology, your organization should see a multitude of benefits such as the following: 

Management and employees see the overall corporate plan and understand how their

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