Seven Characteristics of KPIs

July 14, 2010

Companies are failing to link metrics to critical success factors.

"Performance measurement is failing organizations all around the world," says author David Parmenter in his book "Key Performance Indicators: Developing, Implementing, and Using Winning KPIs" (2010, John Wiley & Sons Inc.) The reasons are myriad, including a failure to link the metrics to critical success factors as well reviewing the measures too infrequently, he explains.

"KPIs represent a set of measures focusing on those aspects of organizational performance that are the most critical for the current and future success of the organization," says Parmenter, who early on in this second edition of his book outlines the seven key characteristics of key performance indicators. KPIs:

Are nonfinancial measures

Are measured frequently

Are acted on by the CEO and senior management team

Clearly indicate what action is required by staff

Are measures that tie responsibility down to a team

Have a significant impact

Encourage appropriate action.

Not certain how to develop KPIs for your organization? Parmenter includes in his tome a 12-step model to develop and use KPIs.

See also: Five Rules for Selecting the Best KPIs to Drive Operational Improvement

About the Author

Jill Jusko

Bio: Jill Jusko is executive editor for IndustryWeek. She has been writing about manufacturing operations leadership for more than 20 years. Her coverage spotlights companies that are in pursuit of world-class results in quality, productivity, cost and other benchmarks by implementing the latest continuous improvement and lean/Six-Sigma strategies. Jill also coordinates IndustryWeek’s Best Plants Awards Program, which annually salutes the leading manufacturing facilities in North America.

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