This document discusses about key performance indicators, their types, and how to implement them in the workplace.

1. Key Performance Indicators (KPI)
February, 2016
Addis Ababa, Ethiopia

2. Introduction
Training Facilitator
Jemal Ahmed
Certified Senior management
development consultant, Researcher
and Trainer
Mobile: 0911055422
em@il: ahmedjemal5@gmail.com
10/05/2024

3. • Definition of KPIs: Key Performance Indicators
(KPIs) are quantifiable measurements used to
gauge a company’s overall long-term
performance
• A key performance indicator (KPI) is a
quantifiable measure of performance over
time for a specific objective.

4. • Key Performance Indicators measure the
organisational performances that are most
critical for the current and future success of an
organisation
• KPIs help organizations align their teams, track
their progress, make data-driven decisions,
and optimize their performance.

5. • KPIs are a key tool for a leader to help make
decisions and guide their teams back on track

6. • KPIs are different from metrics, which are
more general measures of everyday business
• KPIs are the key targets that support the
strategic goals of the organization.

7. • KPIs specifically help determine a company’s
strategic, financial, and operational
achievements.

8. • • KPIs measure the performance of an going
process to achieve a goal or target. •
• The KPI must be an indicator to measure the
current and future success of the organisation.

9. • • A KPI must be understood by all staff and
everyone must know what corrective action to
take. This corrective action must impact the
KPI. • KPIs must be defined using SMART
objectives.

10. • Purposes of KPIs: KPIs help organizations
identify strengths and weaknesses, make data-
driven decisions, and optimize performance.
• They provide teams with targets to aim for,
milestones to gauge progress, and insights to
help guide decision-making throughout an
organization.

11. • KPIs as a Performance Management Tool: KPIs
are crucial tools for measuring and tracking
the progress of business objectives.
• They are used to monitor progress, identify
strengths and weaknesses, and make
informed decisions.

12. • Examples of KPIs: Examples of KPIs include
profit margin, customer satisfaction,
productive efficiency, throughput, web traffic,
click-through rate, customer lifetime value,
customer acquisition cost, job satisfaction,
revenue growth, revenue per client, client
retention rate, total cycle time, error rate,
quality rate, etc.

13. • - Revenue growth rate: The percentage
increase or decrease in revenue over a period
of time.
• - Customer satisfaction score: The average
rating given by customers to a product,
service, or company based on surveys or
feedback forms.

14. • - Employee turnover rate: The percentage of
employees who leave the organization
voluntarily or involuntarily over a period of
time.
• - Net promoter score: The percentage of
customers who would recommend a product,
service, or company to others minus the
percentage who would not.

15. • - Return on investment: The ratio of net profit
to total investment for a project, campaign, or
initiative

16. • - Financial KPIs: These are indicators that
measure the financial health and performance
of the organization, such as revenue, profit,
cash flow, and budget variance.

17. • - Customer KPIs: These are indicators that
measure the satisfaction, loyalty, retention,
and acquisition of customers, such as
customer lifetime value, churn rate, and
conversion rate.

18. • Employee KPIs: These are indicators that
measure the engagement, productivity,
retention, and development of employees,
such as employee satisfaction score,
absenteeism rate, and training hours

20. • Functions of KPIs: KPIs provide a focus for
strategic and operational improvement, create
an analytical basis for decision making, and
help focus attention on what matters most.

21. Steps to Develop KPIs:
1. Identify and prioritize strategic goals.
2. Select the right KPIs.
3. Link KPIs to strategic goals.
4. Establish a data collection and management
system.
5. Define measurement methods and frequency.
6. Create a KPI reporting framework.

22. • - Define the strategic goals and objectives of
the organization and each department or
team.
• - Identify the key drivers and outcomes that
contribute to the achievement of those goals
and objectives.
• - Choose the most relevant and meaningful
indicators that measure those drivers and
outcomes.

23. • - Set SMART (specific, measurable, achievable,
relevant, and time-bound) targets for each
indicator.
• - Collect and analyze data regularly to monitor
and evaluate the performance of each
indicator.
• - Communicate and report the results to
stakeholders and take action to improve
performance if needed.

24. • KPIs can also be categorized into short-term
and long-term KPIs based on their timeframe.
• Short-term KPIs are usually measured on a
monthly or quarterly basis and reflect the
immediate impact of actions or initiatives.
•

25. • Long-term KPIs are usually measured on a
yearly or multi-year basis and reflect the
strategic impact of actions or initiatives.

26. • Short Time KPIs: Operational KPIs typically
measure performance in a shorter time frame,
and are focused on organizational processes
and efficiencies.

27. • - Operational KPIs: These are low-level
indicators that track the efficiency and
effectiveness of processes, activities, and tasks
within the organization.

28. • Strategic KPIs: Strategic KPIs are usually the
most high-level.
• These types of KPIs may indicate how a
company is doing, although it doesn’t provide
much information beyond a very high-level
snapshot.

29. • - Strategic KPIs: These are high-level indicators
that monitor the overall performance of the
organization in relation to its vision, mission,
and values.