Key Performance Indicators (KPI): These are the essential measures in a business, and are useful to know the performance of the organization. It is important to know with clarity which are these essential indicators to take decisions for the business, because a deficient choice in the indicators can bring bad decisions or a loss in efficiency coming from the unnecessary use of technology for irrelevant measurements.
In general, it is said that any business has two kinds of indicators: results indicators and performance indicators. Results indicators show the achievements of the corporate operation and are used to know if there are problems in the process that should be fixed. However, they don’t allow an understanding on how to solve the issue or which are the elements producing it. This is the importance of performance indicators: they give
“measures that can be tied to a team or a cluster of teams working closely together for a common purpose. Good or bad performance is now the responsibility of one team. These measures thus give clarity and ownership” (Parmenter, 2020).
Thus, KPI’s are the real key and essential information that “tell management how the organization is performing 24/7, daily, or weekly in their critical success factors, and by taking action management is able to increase performance dramatically (Parmenter, 2020). Many companies confuse these kinds of indicators and for that reason they fail in its improvement and correction processes.