Management Terms & Abbrevations

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Short Management Abbreviations

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What Is a KPI?

A Key Performance Indicator (KPI) is a quantifiable metric that reflects how well an organization is achieving its stated goals and objectives.

For example, if one of your goals is to provide superior customer service, you could use a KPI to target the number of customer support requests that remain unsatisfied at the end of each week. This will measure your progress toward your objective.

KPIs link organizational vision to individual action. An ideal situation is where KPIs cascade from level to level in an organization. You can visualize this by thinking of your organization as a pyramid, as shown in Figure 1, below.

The pyramid has strategic vision at the top, feeding down to specific actions at the bottom. In the middle you'll find the KPIs that have been derived from the strategy, objectives, and Critical Success Factors  (CSFs) of your organization.

CSFs are the areas of activity in which your organization must perform well in order to be successful. KPIs are the means by which these CSFs can be measured. The actions below the KPIs are the tasks and projects that you carry out in order to achieve the KPIs.