KPIs are financial and non-financial indicators used by organizations to determine and fortify their success aiming at already established long term goals. Organizations establish strategic goals that they wish to realize, and measuring if they are achieved is essential (Appleton, 2017). One of the ways that the progress of an organization towards achieving the strategic goals is by using key performance indicators. An essential thing that any organization that wants to measure its performance should bear in mind is the appropriate choice of key performance indicators (KPIs). Continued measuring is a foundation for continuous improvement of an organization’s performance, and this is an essential principle of management (Appleton, 2017). An organization that wants to be effective and successful should understand that if adequate information on processes, products or services is not available, these parts cannot be controlled.
For an organization to be competitive, it should control the different parts of the organization, such as workers, processes, and activities, among other organizational parts. Key performance indicators also provide vital information required in providing an immediate snapshot of an organization’s overall performance ( Velimirović et al., 2011 ). Today, the business environment has become very competitive. As a result, it becomes important for organizations’ leaders to access real-time information related to the health of their organizations. Key performance indicators give essential information needed in decision making. Measurement of organizational performance using key performance indicators makes it possible for organizations to express success in terms of numbers effectively. Apart from control, guiding and developing roles, KPIs also play the motor function. They encourage the management to realize organizational goals and motivate all other stakeholders, including employees, to achieve the established goals and at a higher level (Hristov & Chirico, 2019). Therefore, key performance indicators are not only static but also stable indicators whose meaning goes beyond information comparison.
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References
Appleton, L. (2017). An overview of key performance indicators. Libraries and Key Performance Indicators , 61-72. https://doi.org/10.1016/b978-0-08-100227-8.00009-1
Appleton, L. (2017). How can KPIs be used in performance measurement? Libraries and Key Performance Indicators , 73-84. https://doi.org/10.1016/b978-0-08-100227-8.00010-8
Hristov, I., & Chirico, A. (2019). The role of sustainability key performance indicators (KPIs) in implementing sustainable strategies. Sustainability , 11 (20), 5742. https://doi.org/10.3390/su11205742
Velimirović, D., Velimirović, M., & Stanković, R. (2011). Role and importance of key performance indicators measurement. Serbian Journal of Management , 6 (1), 63-72. https://doi.org/10.5937/sjm1101063v
