Key Performance Indicators

You can only manage what you can measure The setting of Key Performance Indicators (abbreviated as KPI) is an important aspect of the strategic planning process and plays a major role in the measurement of progress of the organisation towards the attainment of its planned goals. This measurement of progress is an essential feature of strategic plan implementation (i.e. plans are one thing, but making things actually happen is quite another). Organisation management must periodically assess progress and take corrective action if progress is not being achieved. Without periodic assessment of progress, strategic plans are likely to fail.

The terms "Performance Measures" and "Performance Indicators" mean the same and the use of the word "Key" as in Key Performance Indicators merely means the Performance Measures that are deemed to be most important.

Example of a key performance indicator

As a typical example, organisations in sport very often have a goal to reach a certain number of members. For example, a football club might have a goal to reach 1000 members within a period of 5 years. In such a case, it is important to periodically measure the total number of members and to determine whether progress is being made.

Obviously, the Key Performance Indicator for this goal is the number of members, and it is relatively easy to measure. For each of the 5 years of the strategic plan, a target can be set and this target is the Key Performance Indicator for that goal.

However not all goals contained within the strategic plan will have obvious key performance indicators. The following table provides examples of key performance indicators for difficult-to-measure objectives.

Objective	Possible Key Performance Indicator (KPI)
Increase the quality of programs	Attainment of results (e.g. desired placings in national championships) The number of reported injuries (is there a reduction?) The number of complaints (is there a reduction?)
Improve facilities to national standard	Construction / re-development of a facility suitable for national and international championships and tournaments Certification (as a national standard facility)
Increase clubs in North Queensland	Existence of clubs in Cairns, Townsville and Mackay The number of fully constituted clubs in Northern Queensland
Increase in sponsorship revenue	Major state sponsor ($30,000) found Total sponsorship revenue reaches $50,000

It is important to consider that key performance indicators will be reported to stakeholders. They provide "essential-to-know" information.

Key performance indicators should be clear-cut, that is they are either achieved or not achieved. Using key performance indicators, the management process will compare what was desired with what actually happened.