The key performance indicators or the KPIs are among the most important features of a good measurement system. The success of both the balanced scorecard and the strategy maps rely on the KPIs. If you have efficient indicators, there is no doubt that you will be able to keep track of the performance of your company without much effort. You need to choose the right KPIs so that the balanced scorecard will be effective. Unfortunately, creating or devising the KPI set is not as easy as 1-2-3 especially if you are designing a universal KPI. You need to understand first that you should be able to keep an eye on the goals of the business as well as the other important elements of the company such as the mission, vision, target values and the strategy itself. Every business has its own critical success factors or CSFs and it is essential that the KPIs are connected to those factors.
Right now, there are several resources that we can count on if you are a beginner in applying the KPI into your business. Such resources can give you KPI sample which you can use to understand more about the KPIs themselves. In addition to that, you can find the most used indicators of the companies that have the same products or services as you do. You can create a list of the KPIs that you are interested in using and then you can narrow them down to the ideal number of indicators for your business.
The balanced scorecard has four perspectives and from those perspectives, there should be appropriate indicators. In the first perspective which is the financial perspective, the indicators that you can use here include the total assets holdings, the capital productivity ratio, the profitability of the assets, the market price per share, the added value for every employee and the efficiency of assets among others. When it comes to the customer perspective, indicators that you can utilize here are the number of customers, the number or the percentage of lost customers, the number of customers for every employee, the customer satisfaction, the trademark index, average annual expenditures in serving one customer and the average time between the first communication or interaction between the customer and the company.
The third perspective is the internal business process. Here, you can look for KPI examples for BSC which target the ratio of accurate and timely orders that have been completed, the average development time for the latest product or service, the supplier frequency, the labor productivity growth, the turnover of material assets and the number of orders that have been properly executed. Finally, we have the learning and growth perspective. This is where you can use indicators that concentrate on the expenses that have been used for innovation and research, the specific weight of the research costs in the total sum of expenditures, number of rational ideas from every employee, employee satisfaction index and the length of projects in innovation and research. These are just some of the samples of indicators in BSC perspectives. There is a growing list of KPIs that you can check out and you can use them to find the most suitable KPI sample.