In a company, making an example of the company's criteria is one of the considerations. However, how important is KPI for your company?



What is a KPI?

Key Performance Indicators (KPI) are indicators that are used to measure the performance of a company to meet the company's strategic and operational objectives. Making a sample KPI of a company can help your business venture ascertain how far the progress has been achieved and what will be achieved.

This benchmark can be used to see the performance of the company's important assets, namely company employees. This is because the performance of the company can be very dependent on the performance of employees as well. So, it is very necessary to manage regularly the performance of each employee as a benchmark for the development and defense of the company's performance. Such performance is like increasing customer satisfaction and also increasing company revenue. This recognition can be done objectively by setting indicators that have to do with the field or job description.


Elements & Examples of Company KPI

 Examples of company KPIs are made after the company has a clear strategy and objectives. KPI can help companies ascertain how far the progress of their goals will be achieved. The following indicators of strategic success must meet the following elements:

- The success of KPI can be a means for companies to communicate their strategy.
- Can have a direct connection with the strategy chosen by the company.
- This KPI indicator is quantitative in meaning it has a certain formula in its calculations.
- KPI indicators can be calculated
- The frequency of updates is very useful
- Setting targets for repairs can also be done
- The possibility of comparison with other companies can be done
- Measurements are still very valid
- Data and resources available
- The cost of measurement is no more than the benefit.

Measuring Performance at KPI

There are two types of performance measurement, namely lag performance indicators and lead performance indicators. These two indicators are interconnected because they provide information about how the results or objectives can be achieved. In addition, this indicator can also ensure that the size made is in accordance with the organization's strategic goals.

The same thing with the lead indicator without a lag indicator, then only the lead indicator can focus on short-term performance, but you cannot see the results or objectives of the company in large or if longer time has been achieved. At the lead indicator, it should at least allow you to take preliminary actions to be able to increase opportunities to achieve strategic goals.

This lead indicator can be known before the risk occurs which explains a condition of a process. While the lag indicator is the size of the past performance and is known after the risk occurs.


The following are examples of KPI companies from various fields:

1. KPI in HR / HR
2. Marketing KPI
3. Information Technology KPI
4. KPI in Finance
5. Production KPI

One of the BSC method differences (when compared to other methods) in determining KPI is an example of a company's KPI in BSC determined from the vision and mission to the objective strategy. Recently, this strategy objective can be identified by the KPI needed. So, the BSC is more of a top-bottom approach.

This is very similar to the Japanese company trading strategy that prioritizes market share needs and then determines costs and PTF per product than foreign companies that mass produce goods.

KPI preparation for profit organizations is easier when compared to non-profit. In profit organizations, the achievement of profits and dividend distribution can be more easily measured by the financial scorecard sorted at the front. The vision and mission as well as the relationship between the organization and stakeholders and shareholders can also be more clear.

Conversely, the vision and mission and the relationship between non-profit organizations and their shareholders and stakeholders are sometimes not clear. The vision and mission that is carried out also likes to change. Measurement per program is easier than uniting it in an organization. Socially and the beneficiaries of the scorecard are at the forefront, then it must be able to determine the measurement of qualitative information. If the social and beneficiaries are successful and remain qualified and also the cost per person who does the activity or the cost per non-program decreases and is also effective. Then it becomes a valuable valuation for investors or funders. They will also be competing to make social investments for the organization.

In the end, the determination of KPI must be done by looking at the needs of the organization to achieve the best results. Examples of good corporate KPIs do not have to be applied to many measurements, but the main ones are those that support organizational goals.


KPI Function for Business

 The following is the function of KPI for a business:

- Job Energizer

It should be, KPI is always distributed to all employees clearly and also transparently. This is due to the survey conducted by Geckoboard about mushroom management, there are more than 80% of employees in a company wanting transparency about information and data that the boss has, through this transaction, the employee will increase his motivation to reach all company goals. So, do not let things happen that the company and employees don't want, such as resign reasons and employee rights that are not met.

- Measuring Performance

Not only able to measure employee performance or performance, KPI is also able to measure the extent to which a business has developed. Is the business developing towards the good or just the opposite? From this data, you can get solutions for decision making, such as adding employees to cut production costs.

Employee job evaluation methods are very diverse, one of which is the effectiveness of the time spent for 8 hours of work, from the start, resting to home without homework being taken home. However, this evaluation will only make you judge subjectively without knowing what exactly they have contributed to the company.

- To hone a skill

After you know and make an example of a company KPI, then in the process of running a business when there are problems that must be faced, the ability of the responsibility holder will increasingly become sharper to decide about the best way to be able to respond to the company's business goals.

Types & Examples of Company KPI

 - Financial

Financial is the main thing in the business so that it develops. Everything held by finance such as cash flow, net income, debt, expenses, income and operational costs must be included. Without the documentation, you will find it hard to give a decision on all the routines that were carried out for the past 6 months.

- Operations

This KPI is able to measure how all employees can provide the best service for their customers. Examples of KPI measurements for each different type of business:

1. Online service business: About how to provide 24-hour service
2. Product sales business: about the timely delivery of goods to consumers or customers.

- Growth

A complete KPI is a KPI that can be used to measure business progress, one of which is the type of growth KPI, starting from the number of visitors, leads, customers to company partners.