The Various Applications of KPIs - From Marketing to Honorary KPI

 Key performance indicators or KPIs are important components of any organization's measurable objectives. They consist of both financial and non-financial measures that reflect how well an organization is performing concerning the goals it has set for itself. Many different applications of this concept exist in management practice: manufacturing KPI, customer service KPI, internal process KPI, and even bonus or honorary KPI.

These key performance indicators vary widely across different types of organizations with various different objectives. For marketing-oriented organizations, for example, important key performance indicators could include customer growth rate, customer profitability, customer attrition, and customer satisfaction. Manufacturers, on the other hand, would focus on a set of KPIs that includes overall equipment effectiveness, total effective equipment performance, loading, availability, and quality. Other organizational aspects would also come with their own key performance indicators.

KPIs should arise from a good understanding of the organization's business processes, strategic objectives, and measurement capabilities. Understanding business processes simply means that management should be aware of what interrelated tasks go into the day-to-day running of an organization. For example, when formulating a bonus KPI for a customer service agent, it would be best to have a clear idea of what tasks and responsibilities such an agent perform daily. Without knowing about internal and external business processes, managers would find it difficult, if not outright impossible, to set about improving organizational performance!

Then, managers should be able to formulate and clearly articulate the organization's strategic objectives. By looking at the various business processes, managers should be able to identify points for improvement. These areas for improvement can be emphasized and worked on by setting appropriate objectives. If we go back to the example of determining bonuses or honoraries for customer service agents, the objectives that could be set for agent performance include faster handling times and better satisfaction rates.


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