KPI

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KEY PERFORMANCE INDICATORS

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Key performance indicators (KPIs) should be the vital navigation instruments used by managers to understand whether their business is on a successful voyage or whether it is veering off the prosperous path . KEY PERFORMANCE INDICATORS

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The problem is that most managers are struggling to understand and identify the vital few management metrics and instead collect and report a vast amount of everything that is easy to measure. KEY PERFORMANCE INDICATORS

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I have organized top 25 KPIs into the following four business areas : Measuring and understanding your customers Measuring and understanding your financial performance Measuring and understanding your internal processes Measuring and understanding your employees KEY PERFORMANCE INDICATORS

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Part 1 Measuring and Understanding Your Customers

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1. Net promoter score (NPS) How likely is it that a customer will recommend your business to a friend ? KEY PERFORMANCE INDICATORS

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2. Customer profitability score How much profit do individual customers bring to your business, after deducting the costs of attracting and keeping them happy with advertising, customer services etc ? KEY PERFORMANCE INDICATORS

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3. Customer retention rate How many of your customers are going to come back for more? And how loyal are they to your brand, organization or service ? KEY PERFORMANCE INDICATORS

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4. Conversion rate How well do you translate enquiries, sales calls into paying customers? KEY PERFORMANCE INDICATORS

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5. Relative market share How big your slice of the pie is, compared to your competitors in the same market. KEY PERFORMANCE INDICATORS

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Part 2 Measuring and understanding your financial performance

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6. Revenue growth rate   The rate at which you are increasing your company’s income . KEY PERFORMANCE INDICATORS

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7. Net profit Income minus expenses – the bottom line, but certainly not the only metric you need to worry about ! KEY PERFORMANCE INDICATORS

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8. Net profit margin The percentage of your revenue which is net profit . KEY PERFORMANCE INDICATORS

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9. Gross profit margin The percentage of your revenue which is gross profit (the profit generated for each dollar of sales). KEY PERFORMANCE INDICATORS

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10. Operating profit margin Operating income divided by revenue – another measure of a company’s profitability. KEY PERFORMANCE INDICATORS

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11. Return on investment (ROI)   The revenue generated by investing money into an aspect of a company’s operations, in relation the cost of that investment . KEY PERFORMANCE INDICATORS

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12. Cash conversion cycle (CCC ) How long does it take for money invested in the business (for stock etc ) to come back to the company in the form of increased revenue . KEY PERFORMANCE INDICATORS

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Part 3 Measuring and understanding your internal processes

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13. Capacity utilisation rate (CUR) Are you meeting your potential in terms of amount of work you can carry out, with the resources you have available? KEY PERFORMANCE INDICATORS

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14. Project schedule variance (PSV)   Are your projects reaching completion on time? KEY PERFORMANCE INDICATORS

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15. Project cost variance (PCV)  Are your projects coming in without going over budget? KEY PERFORMANCE INDICATORS

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16. Earned value (EV) metric Value generated by your company’s ongoing projects. KEY PERFORMANCE INDICATORS

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17. Order fulfilment cycle time (OFCT ) The time that it takes from a customer placing an order, to the product or service being delivered. KEY PERFORMANCE INDICATORS

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18. Delivery in full, on time (DIFOT) rate   Customer orders filled in full, and on time, compared to total number of customer orders. KEY PERFORMANCE INDICATORS

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19. Quality index   Is the quality of your goods or services as high as your customers are expecting? KEY PERFORMANCE INDICATORS

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20. Process downtime level How much time is wasted due to downtime, technical breakdown or staff sickness. KEY PERFORMANCE INDICATORS

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Part 4 Measuring and understanding your employees  

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21. Staff advocacy score How likely are your staff to recommend you as a company to work for? KEY PERFORMANCE INDICATORS

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22. Employee engagement level   How does your employee’s behaviour contribute to the business’s overall goals? KEY PERFORMANCE INDICATORS

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23. Absenteeism Bradford factor   How much is unauthorized staff absence costing your business? KEY PERFORMANCE INDICATORS

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24. Human capital value added (HCVA )   The financial value added to the business by individual members of staff. KEY PERFORMANCE INDICATORS

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25. 360-degree feedback score How staff rate each other – as well as themselves. KEY PERFORMANCE INDICATORS

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Prepared By : Fayyaz Ahmed AQESA f.ahmed@aqesa.com

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