Key Performance Indicators (KPIs) are critical metrics that assess organizational performance relative to strategic objectives. They should align with business goals, be actionable, realistic, and measurable, and could include both quantitative and qualitative measures. The document outlines the process of setting KPIs, including defining objectives, choosing appropriate measures, and establishing targets to facilitate progress tracking and decision-making.

1. KEY PERFORMANCE
INDICATOR (KPI)
By
Ph.Ijaz Hussain
Pharmacy Quality and Medication safety
Supervisor

2. Definitions
A KPI is a key performance indicator that
measures how your company is performing at
achieving a certain goal or objective. There
are KPIs for every aspect of business, whether
it's financial, marketing, sales, or operational
Key Performance Indicators (KPIs) is a
measure of how your teams are performing to
meet the overall business goals and objectives
Cont…
KEY PERFORMANCE INDICATOR (KPI)

3.  Key Performance Indicators (KPIs) are the critical
(key) indicators of progress toward an intended
result. KPIs provide a focus for strategic and
operational improvement, create an analytical basis
for decision making and help focus attention on
what matters most.”
 Key Performance Indicators (KPIs) are the subset of
performance indicators most critical to your
business at the highest level of your organization.
KPIs are used to help you measure your progress
toward achieving your strategic goals.”
KEY PERFORMANCE INDICATOR (KPI)

4. KPIs should be aligned with the overall
business strategy and outcomes.
KPIs should be actionable. Once you’ve
set your KPI, you need to outline the
steps you’ll take to reach it and the
metrics you’ll measure along the way.
KPIs should be realistic.
KPIs should be measurable
CHARACTERISTICS OF A GOOD KPIS

5. Determine the Key Strategic Objectives.
Describe the Intended Results.
Understand Alternative Performance Measures.
Select the Right Measure(s) For Each Objective.
Define Composite Indices as Needed.
Set Targets and Thresholds.
Define and Document Selected Performance
Measures
HOW TO SET A KPI

6. KPIs are supposed to align team activities
with the organization’s greater goal, which
means that you have to identify your key
strategic objectives. For example, do you
want to increase your organization’s
overall sales
DETERMINE THE KEY STRATEGIC OBJECTIVES

7. Once you’ve identified your primary goals,
you’ll need to figure out what success
looks like. For example, let’s say you want
to increase profit by X%. In this case, it’s a
good idea to look at the end goal and work
backward.
DESCRIBE THE INTENDED RESULTS

8. how do you measure a KPI that can’t be
measured in the “traditional” way? The answer
is using a correlational model and a little bit of
research. Let’s say you’re trying to measure
your brand’s reputation, which can be difficult
to quantify. In this case, you could list down all
the things that correlate with a good reputation,
like shares on social media or inquiries.
Another route you can take is finding the
factors that contribute to a goal’s completion.
UNDERSTAND ALTERNATIVE PERFORMANCE
MEASURES

9. Once your goal has been clearly identified
and you’ve figured out the steps necessary to
fulfill it, you’re ready to start planning which
measures to use. Keep the various types of
KPIs and their intended functions in mind
when deciding which measure to use. For
example, you wouldn’t establish a qualitative
KPI for the number of sales made or classes
booked in a month. Instead, you’d set a
quantitative KPI
SELECT THE RIGHT MEASURE(S) FOR EACH
OBJECTIVE

10. Some businesses have big, intangible goals, which
means the data they produce may provide insight into
the intended outcome. This is especially true if the
data identifies several components or dimensions of a
goal. So, how do you create meaningful measures for
more complex situations or objectives?
The answer is a composite index. These indices group
several KPIs together to track how they impact and
affect each other. Composite indices can be extremely
helpful when measuring abstract concepts like brand
loyalty and sentiment
DEFINE COMPOSITE INDICES AS NEEDED

11. Now that you have your specific measurements, you’ll
need to decide how to interpret the results from these
measures. This is done by setting targets and
thresholds. Without these thresholds, your indicator
becomes more of a metric than a KPI.
So, how do these thresholds work?
Imagine a chart that’s split into three lengthwise
portions. The top portion is green, the middle is yellow,
and the bottom is blue. For example, if this were a
chart indicating sales volume, then an outcome in the
green portion would suggest a high sales volume.
These thresholds serve as an easy way to track
progress over time and reevaluate strategies.
SET TARGETS AND THRESHOLDS

12. Defining and documenting your performance
measures are crucial for transitioning from
KPI planning to implementation. This
process involves clearly describing the
standard you’ve chosen to use, including the
outcomes it’s supposed to measure, how
data is collected, and how often these
metrics are evaluated. It also clearly defines
essential terms so that data collection is
consistent over time
DEFINE AND DOCUMENT SELECTED
PERFORMANCE MEASURES

13. Specific, Measure, Attainable, Relevant, Timeframe =
SMART
Is your objective specific?
Can you measure progress towards your goal?
Is the goal realistically attainable?
How relevant is the goal to your organization?
What is the timeframe for achieving this goal?
DEFINING KPI BY SMART FRAMEWORK

14. There are many types of KPIs that you can
use in your business. Some KPIs are high
level, others are low level within an
organization. The common thread is that
all of these are objectives and you should
use the ones that make most sense for
your business strategy, some of the most
common categories are discussed below
DIFFERENT TYPES OF KPIS

15. Whereas qualitative KPI is a descriptive
characteristic, something like employee
satisfaction.
QUALITATIVE KPI

16. Operational Key Performance
Indicator (KPI) evaluates the
efficiency of its day-to-day operations
within an organization. These KPI
helps management identify which
strategies are effective. Examples for
operational KPIs are cost per patient.
OPERATIONAL KPI

17. Strategic KPIs are more about
monitoring progress or trends
toward a stated destination, and
focus on more long-term, big-
picture goals within an
organization like customer
acquisition cost.
STRATEGIC KPI

18. A leading KPI measures performance
before the business or process follows a
pattern or trend, this can be used for
future prediction.
LEADING KPI

19. A lagging KPI measures performance
after the business or process follows a
pattern or trend, such as annual sales
for the previous year.
LAGGING KPI

20.  https://www.klipfolio.com/resources/articles/what-is-a-key-
performance-indicator
 https://people.ai/blog/how-to-develop-kpis/
REFERENCES