Database Reference
In-Depth Information
9.2.1 Classification of Key Performance Indicators
There have been many proposals of classification of KPIs. The simplest one
is to classify them according to the industry in which they are applied. In
this way, we have, for instance, agriculture KPIs, education and training
KPIs, finance KPIs, and so on. Another simple classification is based on the
functionals area where they are applied. Thus, we have accounting KPIs,
corporate services KPIs, finance KPIs, human resources KPIs, and so on.
KPIs can be also classified along other dimensions, for example, the
temporal dimension. In this way, we have:
Leading KPIs, which reflect expectations about what can happen in the
future. An example is
expected demand
.
Coincident KPIs, which reflect what is currently happening. An example
is
number of current orders.
Lagging KPIs, which reflect what happened in the past. Examples include
earnings before interest and taxes
or
customer satisfaction
.
Another dimension along which we can classify KPIs refers to whether the
indicator measures characteristics of the input or the output of a process.
Thus, we have:
Input KPIs, which measure resources invested in or used to generate
business results. Examples include
headcount
or
cost per hour
.
Output KPIs, which reflect the overall results or impact of the business
activity to quantify performance. An example is
customer retention
.
KPIs can be also classified as qualitative or quantitative:
Qualitative KPIs, which measure a descriptive characteristic, an opinion,
or a property. An example is
customer satisfaction measured through
surveys
, where even if survey data are quantitative, the measures are based
on a subjective interpretation of a customer's opinions.
Quantitative KPIs, which measure characteristics obtained through a
mathematical expression. These are the most common kinds of KPIs. An
example is
units per man-hour
.
KPIs can be also classified as strategic or operational:
Strategic KPIs, which are typically reported to senior levels in the orga-
nization and at less regular intervals than the corresponding operational
indicators. They have a medium- or long-term time scope.
Operational KPIs, which are focused at lower levels in the organization
and are reported more frequently than strategic indicators. They usually
have a short-term time scope.
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