Understanding Key Performance Indicators (KPIs) and Their Functions
Key Performance Indicator – Management and evaluation are important functions that allow
the organization's work plan to be implemented properly so that the organization's ultimate
goals can be achieved. A good performance management system is necessary for proper
control and evaluation functions. A good performance management system should be able
to describe business processes that take place throughout the organization.
This performance management system can also be measured usingKey Performance
Indicators (KPIs), so it can also be a good measure of success. The performance management
system contains these key KPIs or performance indicators representing the performance of
all parts of the organization and the interrelationships between those parts.
Many companies already have a performance management system in place, but it only
provides a "list of KPIs" and ignores intermetric relationships.
Over the past few decades, performance management systems such as the Balanced Score
Card (BSC) have been developed to explain the interrelationships between indicators. In the
BSC, the relationship between indicators is expressed only qualitatively.
If this relationship can be expressed quantitatively, the power measurement model can be
used for clearer and more specific purposes. Such as, more specific repair efforts or
predictions of future system operations.
Understanding Key Performance Indicators
Key Performance Indicator (KPI) is a measuring tool that describes the effectiveness of a
company in achieving business goals. Simply put, Key Performance Indicator is a term used to
refer to key performance indicators that need to be implemented by various organizations.
Companies that use KPIs have the goal of measuring their success in achieving their goals. In
its application, KPIs have characteristics that can be seen as follows:
• Regular measurements
• Non-financial Size
• Sizes known to management
• All parties in the organization already understand and understand KPIs
