WORLD ACADEMY OF INFORMATICS AND MANAGEMENT SCIENCES
ISSN : 2278-1315
you need to answer, this establishes what you need to know.
12. Cash conversion cycle (CCC) - How long does it take for
Once you know your high-level information needs you can
money invested in the business (for stock etc.) to come back
then look for the best KPIs that will help you answer your
to the company in the form of increased revenue.
strategic questions.
Measuring and understanding your internal processes
However, it doesn't mean that every company needs to start
13. Capacity utilization rate (CUR) - Are you meeting your
from scratch when it comes to KPIs. I spend my work life
potential in terms of amount of work you can carry out, with
helping companies around the world with their KPIs and
the resources you have available?
have developed a list of metrics I consider global best
14. Project schedule variance (PSV) - Are your projects
practice examples. The Financial Times has recently asked
reaching completion on time?
me to put my 25 top ones into a new book. This book is now
15. Project cost variance (PCV) - Are your projects coming in
complete and about to be published. It describes in detail the
without going over budget?
25 metrics I consider the most important and informative.
16. Earned value (EV) metric - Value generated by your
The 25 KPIs will make a good starting point for the
company's ongoing projects.
development of a performance management system, but
17. Order fulfillment cycle time (OFCT) - The time that it
before we look at the list I would like to express an
takes from a customer placing an order, to the product or
important warning: Don't just pick all 25 - You probably
service being delivered.
don't need or indeed should have all 25 KPIs. Instead, by
18. Delivery in full, on time (DIFOT) rate - Customer orders
understanding these KPIs you will be able to pick the vital
filled in full, and on time, compared to total number of
few meaningful indicators that are relevant for your
customer orders.
business. Finally, the KPIs should then be used (and owned)
19. Quality index - Is the quality of your goods or services as
by everyone in the business to inform decision-making (and
high as your customers are expecting?
not as mindless reporting references or as 'carrot & stick
20. Process downtime level - How much time is wasted due to
tools').
downtime, technical breakdown or staff sickness.
What's more, there will be other, more specialized measures
Measuring and understanding your employees
that are required for your company or industry context. Take
21. Staff advocacy score - How likely are your staff to
for example the network performance KPIs for a telecom
recommend you as a company to work for?
operator or the quality indicators for healthcare providers.
22. Employee engagement level - How does your employee's
These will have to be included in your list of KPIs but will
behavior contribute to the business's overall goals?
never be found in any generic list, at least not in their
23. Absenteeism Bradford factor - How much is unauthorized
industry-specific format.
staff absence costing your business?
So here's a brief rundown of the 25 Need-to-Know KPIs,
24. Human capital value added (HCVA) - The financial value
organized across four business perspectives: customer,
added to the business by individual members of staff.
finance, internal processes and employees.
25. 360-degree feedback score - How staff rate each other - as
Measuring and understanding your customers
well as themselves.
1. Net promoter score (NPS) - How likely is it that a
customer will recommend your business to a friend?
Written by
2. Customer profitability score - How much profit do
Bernard Marr of Forbes (UK)
individual customers bring your business, after deducting
Bernard Marr is a bestselling author, keynote speaker, and
the costs of attracting and keeping them happy with
advisor to companies and governments. He has worked with
advertising, customer services etc.?
and advised many of the world's best-known organizations.
3. Customer retention rate - How many of your customers
LinkedIn has recently ranked Bernard as one of the top 10
are going to come back for more? And how loyal are they to
Business Influencers in the world (in fact, No 5 - just behind
your brand, organization or service?
Bill Gates and Richard Branson). He writes on the topics of
4. Conversion rate - How well do you translate enquiries,
intelligent business performance for various publications
sales calls and web page views into paying customers?
including Forbes, HuffPost, and LinkedIn Pulse. His blogs
5. Relative market share - How big your slice of the pie is,
and SlideShare presentation have millions of readers.
compared to your competitors in the same market.
Measuring and understanding your financial performance
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6. Revenue growth rate - The rate at which you are
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increasing your company's income.
Whether in America, China, South Africa or Nigeria.
7. Net profit - Income minus expenses - the bottom line, but
If you are still waiting on the government, banks or oil
certainly not the only metric you need to worry about!
companies to provide job, then you will wait a long time.
8. Net profit margin - The percentage of your revenue which
Becoming an entrepreneur is the best way to secure your
is net profit.
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9. Gross profit margin - The percentage of your revenue
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10. Operating profit margin - Operating income divided by
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11. Return on investment (ROI) - The revenue generated by
acquisition in over 80 different businesses, raising startup
investing money into an aspect of a company's operations, in
capital and mentorship.
relation the cost of that investment.
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