In most businesses, the employees represent both an organization's biggest expense, and its most valuable asset. This means the company's productivity, and ultimately, its profitability depend on making sure all of its workers perform up to, if not exceed their full potential.
To survive and prosper in today's economic times, companies can no longer manage using financial measures alone. Businesses have to track non-financial measures such as speed of response and product quality; externally focused measures, such as customer satisfaction and brand preference; and forward looking measures, such as employee satisfaction, retention and succession planning.
Key Performance Indicators (KPIs) are a company's measurable goals, typically tied to an organization’s strategy, as revealed through performance management tools such as the Balanced Scorecard.
Most goals are achieved not through the efforts of a single person, but by multiple people in a variety of departments across an organization. Performance management experts agree that cascading and aligning goals across multiple owners creates a "shared accountability" that is vital to a company's success. The company then uses its Key Performance Indicators as the foundation to analyze and track performance and base key strategic decisions regarding staffing and resources.
Implementing the key performance indicators of a balanced scorecard typically includes four processes:
- The company translates its corporate vision into measurable operational goals that are communicated to employees.
- These goals are linked to individual performance goals which are assessed on an established periodic basis.
- Internal processes are established to meet and / or exceed the strategic goals and customer expectations.
- Finally, Key Performance Indicators are analyzed to evaluate and make recommendations to improve future company performance.