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KPI, KRI, Performance Measurement

Performance measurement is the collection of criterion which determines if an organization will be able to prevail; be more successful than its competitors.

While many of the concepts which make an organization successful are not directly measurable, in the process of performance measurement you will look for indicators which are easy to measure and that show performance.

There are four types of performance measures:
• Result Indicators (RIs) tell staff what they have accomplished.
• Key Result Indicators (KRIs) give an overview on past performance to communicate how management has operated from a perspective view.
• Performance Indicators (PIs) tell staff and management what to do.
• Key Performance Indicators (KPIs) tell staff and management what to do in order to increase performance dramatically.

It is essential to understand the differences between RIs and PIs:
• PIs indicate directly what should be done to improve the results, while RIs don’t. Additionally, PIs tie personal responsibility while RIs don’t.
• Financial topics are only related to Result Indicators.
• PIs are monitored continuously, daily or sometimes weekly to drive the action, while RIs are measured sometimes weekly, but more commonly monthly or less frequently.
• The audience of RIs are the CEO and the board, while the audience of the PIs are the CEO and the management and operational teams.

From the CSF and the risks previously defined, you might be able to derive most the performance indicators. The ones which are the more critical and the broadest in the organization will become key ones (KPI, KRI). In the end it is best to keep a ratio of 10 KPIs, 10 KRIs and 80 PIs and RIs.

I am more than recommending you to read the book Key Performance Indicators (KPI): Developing, Implementing, and Using Winning KPIs from D. Parmentier.