Key Performance Indicators

The 75 measures every manager needs to know

Bernard Marr

Publisher: Pearson, 2012, 348 pages

ISBN: 978-0-273-76821-0

Keywords: Finance

Last modified: May 8, 2013, 8:14 p.m.

Performance indicators are essential tools which will tell you if your business is on target or veering off course. Using the right indicators will help you deliver the right results.

Key Performance Indicators cuts straight to the 75 KPIs that matter. It explains what key performance indicators are, gives you short overviews of each metric and describes how to use the measure effectively. There are worked examples throughout which will equip you with the skills to understand, assess and interpret the most important aspects of any business.

From net profit margin, to customer satisfaction through to brand equity, six sigma and employee engagement, the book gives you all the essential performance indicators.

A practical guide to the most powerful financial and non-financial performance indicators vital for every business.

  • Part One: Financial Perspective
    1. Net Profit
      • Why is this indicator important?
      • How do I measure it?
      • Cost/effort in collecting the data
      • Target setting/benchmarks
      • Tips/warnings
      • References
    2. Net Profit Margin
      • Why is this indicator important?
      • How do I measure it?
      • Cost/effort in collecting the data
      • Target setting/benchmarks
      • Tips/warnings
      • References
    3. Gross Profit Margin
      • Why is this indicator important?
      • How do I measure it?
      • Cost/effort in collecting the data
      • Target setting/benchmarks
      • Tips/warnings
      • References
    4. Operting Profit Margin
      • Why is this indicator important?
      • How do I measure it?
      • Cost/effort in collecting the data
      • Target setting/benchmarks
      • Tips/warnings
      • References
    5. EBITDA
      • Why is this indicator important?
      • How do I measure it?
      • Cost/effort in collecting the data
      • Target setting/benchmarks
      • Tips/warnings
      • References
    6. Revenue Growth Rate
      • Why is this indicator important?
      • How do I measure it?
      • Cost/effort in collecting the data
      • Target setting/benchmarks
      • Tips/warnings
      • References
    7. Total Shareholder Return (TSR)
      • Why is this indicator important?
      • How do I measure it?
      • Cost/effort in collecting the data
      • Target setting/benchmarks
      • Tips/warnings
      • References
    8. Economic Value Added (EVA)
      • Why is this indicator important?
      • How do I measure it?
      • Cost/effort in collecting the data
      • Target setting/benchmarks
      • Tips/warnings
      • References
    9. Return On Investment (ROI)
      • Why is this indicator important?
      • How do I measure it?
      • Cost/effort in collecting the data
      • Target setting/benchmarks
      • Tips/warnings
      • References
    10. Return On Capital Employed (ROCE)
      • Why is this indicator important?
      • How do I measure it?
      • Cost/effort in collecting the data
      • Target setting/benchmarks
      • Tips/warnings
      • References
    11. Return On Assets (ROA)
      • Why is this indicator important?
      • How do I measure it?
      • Cost/effort in collecting the data
      • Target setting/benchmarks
      • Tips/warnings
      • References
    12. Return On Equity (ROE)
      • Why is this indicator important?
      • How do I measure it?
      • Cost/effort in collecting the data
      • Target setting/benchmarks
      • Tips/warnings
      • References
    13. Debt-to-Equity (D/E) Ratio
      • Why is this indicator important?
      • How do I measure it?
      • Cost/effort in collecting the data
      • Target setting/benchmarks
      • Tips/warnings
      • References
    14. Cash Conversion Cycle (CCC)
      • Why is this indicator important?
      • How do I measure it?
      • Cost/effort in collecting the data
      • Target setting/benchmarks
      • Tips/warnings
      • References
    15. Working Capital Ratio
      • Why is this indicator important?
      • How do I measure it?
      • Cost/effort in collecting the data
      • Target setting/benchmarks
      • Tips/warnings
      • References
    16. Operating Expense Ratio (OER)
      • Why is this indicator important?
      • How do I measure it?
      • Cost/effort in collecting the data
      • Target setting/benchmarks
      • Tips/warnings
      • References
    17. CAPEX to Sales Ratio
      • Why is this indicator important?
      • How do I measure it?
      • Cost/effort in collecting the data
      • Target setting/benchmarks
      • Tips/warnings
      • References
    18. Price/Earnings Ratio (P/E Ratio)
      • Why is this indicator important?
      • How do I measure it?
      • Cost/effort in collecting the data
      • Target setting/benchmarks
      • Tips/warnings
      • References
  • Part Two: Customer Perspective
    1. Net Promoter Score (NPS)
      • Why is this indicator important?
      • How do I measure it?
      • Cost/effort in collecting the data
      • Target setting/benchmarks
      • Tips/warnings
      • References
    2. Customer Retention Rate
      • Why is this indicator important?
      • How do I measure it?
      • Cost/effort in collecting the data
      • Target setting/benchmarks
      • Tips/warnings
      • References
    3. Customer Satisfaction Index
      • Why is this indicator important?
      • How do I measure it?
      • Cost/effort in collecting the data
      • Target setting/benchmarks
      • Tips/warnings
      • References
    4. Customer Profitability Score
      • Why is this indicator important?
      • How do I measure it?
      • Cost/effort in collecting the data
      • Target setting/benchmarks
      • Tips/warnings
      • References
    5. Customer Lifetime Value
      • Why is this indicator important?
      • How do I measure it?
      • Cost/effort in collecting the data
      • Target setting/benchmarks
      • Tips/warnings
      • References
    6. Customer Turnover Rate
      • Why is this indicator important?
      • How do I measure it?
      • Cost/effort in collecting the data
      • Target setting/benchmarks
      • Tips/warnings
      • References
    7. Customer Engagement
      • Why is this indicator important?
      • How do I measure it?
      • Cost/effort in collecting the data
      • Target setting/benchmarks
      • Tips/warnings
      • References
    8. Customer Complaints
      • Why is this indicator important?
      • How do I measure it?
      • Cost/effort in collecting the data
      • Target setting/benchmarks
      • Tips/warnings
      • References
  • Marketing and Sales Perspective
    1. Market Growth Rate
      • Why is this indicator important?
      • How do I measure it?
      • Cost/effort in collecting the data
      • Target setting/benchmarks
      • Tips/warnings
      • References
    2. Relative Market Share
      • Why is this indicator important?
      • How do I measure it?
      • Cost/effort in collecting the data
      • Target setting/benchmarks
      • Tips/warnings
      • References
    3. Brand Equity
      • Why is this indicator important?
      • How do I measure it?
      • Cost/effort in collecting the data
      • Target setting/benchmarks
      • Tips/warnings
      • References
    4. Cost per Lead
      • Why is this indicator important?
      • How do I measure it?
      • Cost/effort in collecting the data
      • Target setting/benchmarks
      • Tips/warnings
      • References
    5. Conversion Rate
      • Why is this indicator important?
      • How do I measure it?
      • Cost/effort in collecting the data
      • Target setting/benchmarks
      • Tips/warnings
      • References
    6. Search Engine Rankings (By Keyword) and Click-Through Rate
      • Why is this indicator important?
      • How do I measure it?
      • Cost/effort in collecting the data
      • Target setting/benchmarks
      • Tips/warnings
      • References
    7. Page Views and Bounce Rates
      • Why is this indicator important?
      • How do I measure it?
      • Cost/effort in collecting the data
      • Target setting/benchmarks
      • Tips/warnings
      • References
    8. Customer Online Engagement Level
      • Why is this indicator important?
      • How do I measure it?
      • Cost/effort in collecting the data
      • Target setting/benchmarks
      • Tips/warnings
      • References
    9. Online Share of Voice (OSOV)
      • Why is this indicator important?
      • How do I measure it?
      • Cost/effort in collecting the data
      • Target setting/benchmarks
      • Tips/warnings
      • References
    10. Social Networking Footprint
      • Why is this indicator important?
      • How do I measure it?
      • Cost/effort in collecting the data
      • Target setting/benchmarks
      • Tips/warnings
      • References
    11. Klout Score
      • Why is this indicator important?
      • How do I measure it?
      • Cost/effort in collecting the data
      • Target setting/benchmarks
      • Tips/warnings
      • References
  • Part Four: Operational Processes and Supply Chain Perspective
    1. Six Sigma Level
      • Why is this indicator important?
      • How do I measure it?
      • Cost/effort in collecting the data
      • Target setting/benchmarks
      • Tips/warnings
      • References
    2. Capacity Utilisation Rate (CUR)
      • Why is this indicator important?
      • How do I measure it?
      • Cost/effort in collecting the data
      • Target setting/benchmarks
      • Tips/warnings
      • References
    3. Process Waste Level
      • Why is this indicator important?
      • How do I measure it?
      • Cost/effort in collecting the data
      • Target setting/benchmarks
      • Tips/warnings
      • References
    4. Order Fulfilment Cycle Time (OFCT)
      • Why is this indicator important?
      • How do I measure it?
      • Cost/effort in collecting the data
      • Target setting/benchmarks
      • Tips/warnings
      • References
    5. Delivery In Full, On Time (DIFOT) Rate
      • Why is this indicator important?
      • How do I measure it?
      • Cost/effort in collecting the data
      • Target setting/benchmarks
      • Tips/warnings
      • References
    6. Inventory Shrinkage Rate (ISR)
      • Why is this indicator important?
      • How do I measure it?
      • Cost/effort in collecting the data
      • Target setting/benchmarks
      • Tips/warnings
      • References
    7. Project Schedule Variance (PSV)
      • Why is this indicator important?
      • How do I measure it?
      • Cost/effort in collecting the data
      • Target setting/benchmarks
      • Tips/warnings
      • References
    8. Project Cost Variance (PCV)
      • Why is this indicator important?
      • How do I measure it?
      • Cost/effort in collecting the data
      • Target setting/benchmarks
      • Tips/warnings
      • References
    9. Earned Value (EV) Metric
      • Why is this indicator important?
      • How do I measure it?
      • Cost/effort in collecting the data
      • Target setting/benchmarks
      • Tips/warnings
      • References
    10. Innovation Pipeline Strength (IPS)
      • Why is this indicator important?
      • How do I measure it?
      • Cost/effort in collecting the data
      • Target setting/benchmarks
      • Tips/warnings
      • References
    11. Return on Innovation Investment (ROI2)
      • Why is this indicator important?
      • How do I measure it?
      • Cost/effort in collecting the data
      • Target setting/benchmarks
      • Tips/warnings
      • References
    12. Time to Market
      • Why is this indicator important?
      • How do I measure it?
      • Cost/effort in collecting the data
      • Target setting/benchmarks
      • Tips/warnings
      • References
    13. First Pass Yield (FPY)
      • Why is this indicator important?
      • How do I measure it?
      • Cost/effort in collecting the data
      • Target setting/benchmarks
      • Tips/warnings
      • References
    14. Rework Level
      • Why is this indicator important?
      • How do I measure it?
      • Cost/effort in collecting the data
      • Target setting/benchmarks
      • Tips/warnings
      • References
    15. Quality Index
      • Why is this indicator important?
      • How do I measure it?
      • Cost/effort in collecting the data
      • Target setting/benchmarks
      • Tips/warnings
      • References
    16. Overall Equipment Effectiveness (OEE)
      • Why is this indicator important?
      • How do I measure it?
      • Cost/effort in collecting the data
      • Target setting/benchmarks
      • Tips/warnings
      • References
    17. Process or Machine Downtime Level
      • Why is this indicator important?
      • How do I measure it?
      • Cost/effort in collecting the data
      • Target setting/benchmarks
      • Tips/warnings
      • References
    18. First Contact Resolution (FCR)
      • Why is this indicator important?
      • How do I measure it?
      • Cost/effort in collecting the data
      • Target setting/benchmarks
      • Tips/warnings
      • References
  • Part Five: Employee Perspective
    1. Human Capital Value Added (HCVA)
      • Why is this indicator important?
      • How do I measure it?
      • Cost/effort in collecting the data
      • Target setting/benchmarks
      • Tips/warnings
      • References
    2. Revenue Per Employee (RPE)
      • Why is this indicator important?
      • How do I measure it?
      • Cost/effort in collecting the data
      • Target setting/benchmarks
      • Tips/warnings
      • References
    3. Empoyee Satisfaction Index
      • Why is this indicator important?
      • How do I measure it?
      • Cost/effort in collecting the data
      • Target setting/benchmarks
      • Tips/warnings
      • References
    4. Employee Engagement Level
      • Why is this indicator important?
      • How do I measure it?
      • Cost/effort in collecting the data
      • Target setting/benchmarks
      • Tips/warnings
      • References
    5. Staff Advocacy Score
      • Why is this indicator important?
      • How do I measure it?
      • Cost/effort in collecting the data
      • Target setting/benchmarks
      • Tips/warnings
      • References
    6. Employee Churn Rate
      • Why is this indicator important?
      • How do I measure it?
      • Cost/effort in collecting the data
      • Target setting/benchmarks
      • Tips/warnings
      • References
    7. Average Employee Tenure
      • Why is this indicator important?
      • How do I measure it?
      • Cost/effort in collecting the data
      • Target setting/benchmarks
      • Tips/warnings
      • References
    8. Absenteeism Bradford Factor
      • Why is this indicator important?
      • How do I measure it?
      • Cost/effort in collecting the data
      • Target setting/benchmarks
      • Tips/warnings
      • References
    9. 360-degree Feedback Score
      • Why is this indicator important?
      • How do I measure it?
      • Cost/effort in collecting the data
      • Target setting/benchmarks
      • Tips/warnings
      • References
    10. Salary Competitivness Ratio (SCR)
      • Why is this indicator important?
      • How do I measure it?
      • Cost/effort in collecting the data
      • Target setting/benchmarks
      • Tips/warnings
      • References
    11. Time to Hire
      • Why is this indicator important?
      • How do I measure it?
      • Cost/effort in collecting the data
      • Target setting/benchmarks
      • Tips/warnings
      • References
    12. Training Return on Investment
      • Why is this indicator important?
      • How do I measure it?
      • Cost/effort in collecting the data
      • Target setting/benchmarks
      • Tips/warnings
      • References
  • Part Six: Corporate Social Responsibility Perspective
    1. Carbon Footprint
      • Why is this indicator important?
      • How do I measure it?
      • Cost/effort in collecting the data
      • Target setting/benchmarks
      • Tips/warnings
      • References
    2. Water Footprint
      • Why is this indicator important?
      • How do I measure it?
      • Cost/effort in collecting the data
      • Target setting/benchmarks
      • Tips/warnings
      • References
    3. Energy Consumption
      • Why is this indicator important?
      • How do I measure it?
      • Cost/effort in collecting the data
      • Target setting/benchmarks
      • Tips/warnings
      • References
    4. Savings Levels Due to Conservation and Improvement Efforts
      • Why is this indicator important?
      • How do I measure it?
      • Cost/effort in collecting the data
      • Target setting/benchmarks
      • Tips/warnings
      • References
    5. Supply Chain Miles
      • Why is this indicator important?
      • How do I measure it?
      • Cost/effort in collecting the data
      • Target setting/benchmarks
      • Tips/warnings
      • References
    6. Waste Reduction Rate
      • Why is this indicator important?
      • How do I measure it?
      • Cost/effort in collecting the data
      • Target setting/benchmarks
      • Tips/warnings
      • References
    7. Waste Recycling Rate
      • Why is this indicator important?
      • How do I measure it?
      • Cost/effort in collecting the data
      • Target setting/benchmarks
      • Tips/warnings
      • References
    8. Product Recycling Rate
      • Why is this indicator important?
      • How do I measure it?
      • Cost/effort in collecting the data
      • Target setting/benchmarks
      • Tips/warnings
      • References

Reviews

Key Performance Indicators

Reviewed by Roland Buresund

Mediocre **** (4 out of 10)

Last modified: May 8, 2013, 8:15 p.m.

A good idea, badly executed with sloopy thinking.

Some of the examples are nearly ramblings, some of the formulas are so wrong I wonder if anyone proof-read the book. And some are so basic, an nine-year old could do better.

In short, it looks fancy at the surface, but the contents are for the most part plain stupid. Some budding manager may be able to get some value out of this, but it is a waste of space for any MBA or experienced manager.

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