EXCPR™: Key Performance Indicators

Monday, September 9, 2019

Key Performance Indicators – KPIs

Key Performance Indicators – KPIs

Key Performance Indicators can be defined as a system for collecting information and choosing the best, to summarize the actual performance of an organization. By providing the long time, it takes executives to understand the complex operational performance of the company's employees on a morning of work. The importance of this system also lies in the fact that it reflects the real performance of the business and the growth of the organization towards its pre-defined strategic objectives. In addition, these performance indicators are now an integral part of the modern corporate process, which has become a true picture of the company's activity - if it is better painted. Thus, the performance indicators are a true measure of strong engagement and communication with the stakeholders on which the organization relies in its work, thus measuring actual performance with minimal data and aggregated facts.

The importance of a good KPIs system will contribute to raising the company's shares in the various capital markets, considering achieving the principle of transparency and clarity in providing the most prominent data to investors and the relationship with them. In addition, the existence of these selected quality indicators will seek to effectively meet the elements and principles of corporate governance, which have long appealed to Investor Management.

As for the need for such modern standard systems, it is well known that today's companies suffer from the existence of many and many databases, especially after the rapid development of the technology and information sector in the current century, and their flow in the form of many periodic reports. This necessitated the need to acquire the most suitable ones in translating these steps and the work that the institution is doing in achieving its general vision. In the past, traditional companies relied on sales volume as a key indicator in understanding the actual performance of the organization. The higher those sales are, the more the company is moving in the right direction. However, significant competition and rapid development in different markets over the past period showed that, despite the importance of the sales component achieved by the organization, there are many other key signs that will contribute to the sustainability of the organization's operational process and growth quick and desired.

The important question is which of the many information circulating in the organization can be considered a good KPI's performance indicator? To answer this question, it is necessary to first understand the information needed by the board members and the staff of the organization, to guide the work and follow up on its performance well. After understanding those needs of this important and stakeholder segment, we should work in the middle and micro departments of the business unit to feed the business flows with the information necessary for appropriate guidance and decision-making processes. It should also be stressed that an institutional system should be established to measure such data and to channel it with complete credibility in each period of those concerned.

Carefully selected indicators should be one of the necessary milestones to achieve the strategic vision that the company aspires to achieve one day. By identifying these important indicators, it is possible to deduce how long the company's current operational process will take to achieve the desired objectives. Measuring this period will also enable the Board of Directors and senior management to direct all production sources further towards the speed of achieving those strategic objectives - especially critical ones. The following is an aspect of KPIs performance indicators circulating in some business sectors:

It should also be stressed the importance of providing adequate explanation of each of the KPIs success indicators, and the reason for being selected as one of those important indicators in measuring performance. We also emphasize the importance of comparing current performance with another similar standard situation, such as the company's situation in previous periods or compared to other competitors in the market, which will develop the operational process and continuous follow-up effectively.

Performance indicators may vary in substance among themselves, as indicators that are suitable for work and follow-up in one company may not achieve the value added expected of them in other competing companies. Therefore, performance indicators should be selected in particular segment and that fit the needs of the organization precisely, in order to achieve the maximum amount of additions necessary for the institutional process.

Finally, despite the importance of informatics and its circulation in the corporate community, the strength of performance and responsibility must be selected by the most important KPIs performance indicators, relied upon to continuously understand the institutional process, and to make critical management decisions in guiding the course of action. The lack of understanding of the details of the data and information accumulated can also lose the factor of sound planning and good management, thereby losing more market shares, losing business opportunities, and thus exiting markets without return.