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Key Performance Index/Indecator ( KPI)


We keep hearing in news lately in Malaysia and also many new bankers started using this KPI as a term used to measure performance on certain department, person or company. But funny thing on this subject is, we started using KPI in 2004. I think the first person to mention this to me is Mr. Peter Yap. Then Danny started quoting and it was in 2006 that I started realizing the very importance of a KPI. Hmmm... it took me 2 years to actually learn and understand this. Understanding is not only the important part, its actually knowing how and when to apply and make it work effectively for a company. 

So here is some of the things I learned and would like to share. 

Key Performance Indicators are quantifiable measurements, agreed to beforehand, that reflect the critical success factors of an organization. They will differ depending on the organization. A business may have as one of its Key Performance Indicators the percentage of its income that comes from return customers. A school may focus its Key Performance Indicators on graduation rates of its students. A Customer Service Department may have as one of its Key Performance Indicators, in line with overall company KPIs, percentage of customer calls answered in the first minute. A Key Performance Indicator for a social service organization might be number of clients assisted during the year.

Whatever Key Performance Indicators are selected, they must reflect the organization's goals, they must be key to its success,and they must be quantifiable (measurable). Key Performance Indicators usually are long-term considerations. The definition of what they are and how they are measured do not change often. The goals for a particular Key Performance Indicator may change as the organization's goals change, or as it gets closer to achieving a goal.

So Far so good? Well if you cant understand this, its alright. Our Malaysian goverment decided to use KPI on themself lately. And I think, more than 70% of the MP's there dont have a clue of what is it for and how it works. 



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