Introduction
What is KPI
Objectives of KPI
Genesis of KPI
Characteristics of KPI
Benefits of KPI
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Key Performance Indicators (KPIs), which is a new concept of
Performance Assessment, helps organisations understand
how well they are performing in relation to their strategic goals
and objectives. In the broadest sense, a KPI can be seen as
providing the most important performance information that
enables organisations or their stakeholders to understand
whether the organisation is on track or not, e.g. a Doctor might
measure blood pressure, cholesterol levels, heart rate and BMI
as Key Indicators of one’s health.
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An organisation may use KPIs to evaluate its overall success
over a period or to evaluate success of a particular activity or
project in which it is engaged. They are objectives to be targeted
which add the most value to the organisation.
In the case of MDAs, performance indicators flow out of the
Mandates or Laws establishing the respective Agencies. They
can be described as pointers to achievement or otherwise of the
organisation’s goals and objectives. in other words, they are
ways to assess the performances of organizations, business
units, divisions, etc.
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Therefore, KPIs are usual defined in a way that is
understandable, meaningful and the achievement must not be
such as can be hampered by factors beyond the control of the
Agency to be assessed.
In order to be evaluable, KPIs are linked to target values, so that
the value of the measurement can be assessed as meeting
target expectation or not. They also help monitor the execution
of activities such as plans, project or programmes to understand
whether they are on track or not.
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KPI means Key Performance Indicators. They are quantitative and
qualitative measures used to review an organisation's progress against
its goals. These are broken down and set as targets for achievement by
departments and individuals. The achievement of these targets is
reviewed at regular intervals.
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KPI can also be defined as measures that provide organisations or
Managers with the most important information to enable them or their
stakeholders understand the performance level of the organisation.
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Key performance indicators are numbers designed to succinctly convey
as much information as possible. Good key performance indicators are
well defined, well presented, create expectations and drive actions.
Key performance indicators are always rates, ratios, averages or
percentages; they are never raw numbers.
Key performance indicators are designed to summarize meaningfully
compared data.
KPIs assist the agency to define and measure progress toward agency
goals and objectives. Once the agency has analysed its mission and
defined its goals, it needs to measure progress towards those goals.
KPIs provide a measurement tool.
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Performance measurement in organisation is important as it
is believed that “what can be measured can be managed”
and “what gets measured gets done”. In addition, the KPIs
are aimed at:
-Improving evidence based decision making,
-Reporting externally and demonstrating compliance,
-Controlling and monitoring activities,
-Promoting public accountability as it is being used presently
to measure Government MDAs’ performance at the outcome
level of the result chain annually.
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KPIs are also aimed at encouraging efficient and effective
use of allocated resources by MDAs in the execution of
their plans, programmes, etc. The achievement of results
are usually the focus and is expected to lead ultimately to
a visible impact of Government programmes on the
economy and the people.
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Annual Performance Monitoring and Evaluation Reports started
with the Vision 20:2020 and the desire of President Goodluck’s
administration to deliver to the Nigerian people on the promises of
the Transformation Agenda.
The Vision 20:2020 intends to measure performance at the level of
results that must be aligned to the strategic goals and objectives.
This measurement requires that Government plans, programmes,
etc are result based and that the whole public sector adopts Result
Based Management (RBM) principle which is oriented towards:
(a)Achievement of development targets;
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(b) Making public servants responsible;
(c) Transparency and accountability in public affairs and
budgets;
(d) The use of available data to improve decision making
process.
This led to the signing of contracts between Mr. President and
his Cabinet Members. This is a collection of targets for each
MDA to work towards achieving with the relevant fiscal year
in line with their Mandates or enabling laws. The Ministers in
turn are replicating the exercise with Head of Department
and Chief Executive Officers of Parastatals under their
jurisdiction. 11
For KPIs to be meaningful, they should be:
• Relevant to and consistent with the specific agency’s vision,
strategy and objectives;
• Focused on agency wide strategic value rather than non-
critical local business;
• Representative – appropriate to the agency together with its
operational performance;
• Realistic – fits into the agency’s constraints and cost effective;
• Specific – clear and focused to avoid misinterpretation or
ambiguity;
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• Attainable – requires targets to be set that are
observable, achievable, reasonable and credible
under expected conditions as well as independently
validated;
• Measurable – can be quantified/measured and may
be either quantitative or qualitative;
• Timely – achievable within the given timeframe;
Assessed – regular assessment to ensure that they
remain relevant.
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Due To Its Benefits
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Among some of the benefits of KPIs are:
Focuses Attention: What gets measured gets
done. Employees are kept focused when they know
that their performances will be measured.
Clarifies Expectations: Enables managers to
communicate their expectations to subordinates in a
clear and unambiguous manner.
Provides Objectivity: Is not about whether people
are working hard or being busy, but what did they
actually achieve?
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Improves Execution: When you see companies that don’t
execute, then they don’t measure
Promotes Consistency: Outcomes that are not measured
properly tend to fluctuate with negative implications for the
quality of results expected.
Clear Feedback: Holding people accountable for achieving
their level of performance every week/month is vital to
ensure the company (and individual) is on the right track.
Improves Decision-Making: One accurate measure can
be worth a thousand opinions.
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