KEY WORDS OF KPI - KEY PERFORMANCE INDICATORS WHICH EVALUATES THE BUSINESS, HOW HAVE TO GO FOR IT?

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A key performance indicator is a way for a business to evaluate its success against a goal or standard. This might be a strategic goal, such as the implementation of a new product or marketing strategy, or it might be an industry or company standard, such as the customer satisfaction rating. Businesses, particularly those of a smaller size, often talk of KPIs in terms of what is important to the organization as a whole unit. Because of their applicability to a wide range of business processes, KPIs are associated with a set of keywords that are essential to understanding the lingo behind their use.

QUANTITATIVE vs QUALITATIVE

The most basic of distinctions in KPI terminology is between quantitative and qualitative indicators. Quantitative indicators are raw sets of data that can be presented numerically, whereas qualitative indicators cannot be presented as a number. Suppose, in business a survey should take to measure customer satisfaction with a particular product and if that survey asks customers to rank their experiences on a scale of number 1 to number 10, this would be a quantitative indicator. However, if the survey asked customers to provide their feedback in the form of written or verbal comments; then this would be a qualitative indicator.

LEADING vs LAGGING

A further distinction can be made between leading indicators and lagging indicators. Leading indicators are said to have the ability to help a company predict the future outcome of a process. Lagging indicators on the other hand tells the company about past performance. The customer survey on product satisfaction, no matter if it was qualitative or quantitative; would necessarily lagging. That’s because it tells the company about customer’s perceptions of a product already owned or used. However, if the company were to design a method to test the products customers are likely to buy in the future will leads in generating KPIs Input, Process and Output.

Often the success or failure of a project or initiative is due in large part to the availability of resources including time, money and personnel. Input indicators measure the amount of resources consumed during a given business process. For example: the company could measure the amount of time and money it takes to process sales orders. Process indicators are a related category representing the efficiency of given task, so using the same example, could be applied to measure the productivity of company’s staff in processing the orders. This would be represented as the amount of product generated in a given time frame and also have output indicators that represent the results of a process; this is about evaluating the outcome of an operation. If the company knows that the input is two staff members working eight hours a day and the process is the production of 100 times, it can say that the output is the sum of 100 items produced in eight hours every day by two employees.

PRACTICAL, DIRECTIONAL AND ACTIONABLE

Many times, KPIs are used to confirm something that ‘s already generally believed or known about a company’s process. As a business owner, an estimation have to be done based on several factors that company sells around two dozen products a week, for that it needs a hard data to prove this. Practical indicators are any KPIs that reveal data about existing processes and moreover a directional indicator is one that specifies whether the company Jigs getting better or worse at doing something. The company might see a rise in the amount sold month-over-month, for instance. However, if this isn’t the case then the company might identify an actionable indicator—one that is within the business’s control to change. So in business a policy of adopting new marketing standards or increases the social media output all in an attempt to change the practical indicator of monthly sales.

FINANCIAL

A more familiar keyword in the KPI lingo is the financial indicator. All businesses have to keep track of their income and expenditures and they have to keep track of their income and expenditures, they have to keep a close eye on budgeting to keep the business afloat. Financial indicators simply tell that where the business is headed. It asks questions such as: “Is there enough money in the bank?” “Are the company is generating enough revenue to keep the business going?” and “What do needs to improve company’s financial situation?” Thinking of finances in terms of performance indicators helps the business owner to envision how company operations contribute to the overall financial well being of the business.

SUNDARAMURTHY VELMURUGAN – linkedin.com/in/sundaramurthy velmurugan 299586110 LEATHER PROFESSIONAL CONSULTANT from a2z Leather Professional Consultancy, PONDICHERRY.

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