Quantifying the success of action step or process with KPI
According to Zelga (2018), the fundamental role of performance indicator or key performance indicator is to evaluate the success of an organization or that of a particular activity that includes programs, projects as well as other initiatives in which it sees to engage. Key Performance Indicator, or most commonly known as KPIs plays an influential part in an organization as it plays its evident role in the process of decision making by the designated management of the organizations. It is due to the fact that while making decisions, one requires considering several alternatives while requiring to be equipped properly for a situation to be analyzed and thereupon speculate the consequences of the future steps. As such, the relevant role of performance indicators is to monitor as well as measure performance of an organization and consequently making decision in order to attain the desired outcome (Ruli and Kristanto 2021). While using performance indicators for assessing organizational performance bears several advantages there are disadvantages associated with its utility that has been indicated in several context. Based on that concern, the following essay will be denoting down the advantages associated with using performance indicators as well as state the relevant disadvantages while seeing to measure the performance of an organization.
In consideration of the generalized model of key performance indicator, the framework indicates a metric that is utilized for quantifying the success of action step or process. The models of KPI see to incorporate process flow for helping one in adding prioritized information that can be connected to the process step being referenced in the key performance indicator. As much as key performance indicators tend to be denoted as critical indicators for assessing a progress leaded towards an intended outcome, it helps in providing focus on both strategic and operational environment. Ng Corrales et al. (2022) opines that performance indicators help in formulating an analytical basis for making decision while aiding one to focus attention on aspects that are prioritized. In consideration of managing the application of performance indicator the aspect entails setting targets comprising the desired level of performance as well as seeing to track progress against the target. On the other hand, Rehman, Mohamed and Ayoup (2019) stated that managing KPIs bear relevance with improving leading indicators that will further help in driving benefits that have lagged before. In an organizational forefront, key performance indicators tend to play a useful part in providing objective evidence of progress for the purpose of attaining desired results and thereupon measure what is required to be assessed for informing better decision making.
While bearing relevance with the advantages associated with using performance indicators for measuring organizational performance, Hendri (2019) stated that its intended role can help in tracking efficiency, quality, effectiveness, governess, timeliness as well as compliance. On the other hand, it can help one in recognizing as well as addressing the gaps in learning in regards to employee proficiency through learning management. As per Khumhome and Sungsanit (2018), a learning management system enables an HR in customizing, tracking as well as managing training of an employee. It is generally used as a software application being designed to create, management and thereupon deliver training programs to the audience. In that regards, it serves as a central platform for training, assessing as well as tracking the progress of learners in that of an organization. In regards to performance management of an organization, a learning management system seems to monitor the progress as well as performance of employee with KPI metrics seeing to indicate the number of employees who have been able to complete their training as well as scores of knowledge assessment.
Utility of KPI for decision-making and focus on strategic and operational environment
With use of performance indicator, it can be determined whether the intended objective or goal has been attained or not while in the latter case it might lead to the possibility that employees require further training. Being aware of the relevant gap in employee skillset can enable one in initiating training for employees accordingly while a set measurable KPI can help evaluate employee performance and thereupon improve post training (Verhaelen et al. 2021). In that consideration, providing the required training to the employees help in fulfilling the learning gap that further reflects on the overall positive performance of an organization. Another distinctive advantage of using performance indicators in an organizational forefront is that it enables one in evaluating the results and outcome while a performance indicator can be deemed as good if it can be tracked and measured. While providing a way of measuring progress towards goals, one is provide with the scope of making adjustments as well as improvements. In that consideration, the strength of a KPI is relevant in its ability to determine whether the undertaken initiatives have generated the desired outcome.
Tambare et al. (2021) stated that one of the biggest inconsistencies that tend to emerge while seeing to implement bias is the essence of bias that is particularly evident in the sector of management. With that being stated, the inconsistency can seem to be resolved with application of performance indicators with its particular emphasis on facts and figures enables it in minimizing the essence of bias. As it sees to formulate an evidence based management, the purposeful application of performance indicators further helps in increasing the quality of decision being undertaken by an organization and at the same time aids in minimizing uncertainty through management of risks. On the other hand, KPIs have been indicated as an aided insight that can help form a significant part of information that can be utilized in determining as well as explaining how an organization will see to make progress in order for an organization to meet its goals of business as well as marketing (Kusrini, Novendri and Helia 2018). In that regards, performance indicators or KPIs tend to provide aid to an organization in letting it be headed towards the right direction. It is due to the fact that performance indicators can see to generate information against which other programs as well as projects can be measured which further paves way in improving initiatives while learning from experience which eventually help improve the performance of others. In regards to evaluation and monitoring of organizational performance, the purposeful role of key performance indicators can be utilized in evaluating changes throughout the life of a program while it involves in various other activities, outcomes or outputs.
Despite providing several advantages in regards to addressing gaps of employee learning, making effective decision as well as measure progress towards goals, there are disadvantages accounted for while utilizing performance indicators in measuring organizational performance. One of the foremost disadvantages of using performance indicators is its bearing possibility of leading towards decreased level of outputs while generating negative results at an ease (Omar et al. 2019). The eventual requirement of performance indicator is to utilize data for creating performance measurement while being accurate as well as reflective of the metrics as well as tasks being evaluated. With the possibility of generating falsified or negative results in regards to performance measurement, employees providing the best level of efforts can feel the system as being unfair. On the other hand, there is the indicated tendency of not being able to attain the designated metrics for it not being unattainable at the present level of training (Bellisario, Pavlov and van der Steen 2021). In consequence it might lead towards employees feeling demotivated instead of improving overall outcome.
Role of KPI in learning management and employee training
A considerate requirement while measuring performance of an organization through indicators is the involvement of all team members in order for a process to be able to work successfully. In case there has been any form of negative commitment to the process, it tends to disrupt the metric for other that can further see to impact other teams of an organization. It further leads to the possibility of creating conflict in between teams as well as individuals due to the fact that they seem to be competing with each other. As much as the accumulate data points help in making performance management seem less subjective, there is still the factor of human element in the due process wherein a supervisor might see to create negative evaluation of a person’s performance even if the metrics are reasonably met (Arso, Sfenrianto and Wahyudi 2018). Furthermore, there is the indicated possibility for managers making emotional decision that consequently sees to disrupt the process of data collection with the possibility of leading towards falsified conclusions. Aside from that there are additional inconsistencies involved with usage of performance indicators in assessing organizational performance with the foremost aspect being not providing actionable information upon which can see to act immediately. On the other, it does seem to lose out in its utility for bearing vast amount of data due to which one can feel overwhelmed while seeing to track progress.
In conclusion, performance indicators do seem to find its usefulness in being able to identify gaps in the employee learning management system, tracking progress in consideration of the eventual goal, enable proper decision making as well as allowing scope to measure the eventual outcome. However, there are considerable disadvantages acquainted with its utility in measuring organizational performance in regards to providing false or negative results, contributing towards decreased level of output as well as being unable to provide actionable insight and at the same time bearing extended amount of information. Despite its flaws, KPIs still find its usefulness in breaking down large business goals into small and measurable data points that helps in leading successful business as well as guiding the team towards the eventual goals with its ability to track progress.
Reference List
Arso, S.S., Sfenrianto, S. and Wahyudi, M., 2018. Employee Performance Measurement in Teleworking Using Balanced Scorecard. International Journal of Electrical & Computer Engineering (2088-8708), 8(6).
Bellisario, A., Pavlov, A. and van der Steen, M.P., 2021. The role of performance measurement in aligning operations with strategy: sustaining cognitive processes of internal alignment. International Journal of Operations & Production Management.
Hendri, M.I., 2019. The mediation effect of job satisfaction and organizational commitment on the organizational learning effect of the employee performance. International Journal of Productivity and Performance Management.
Khumhome, B. and Sungsanit, M., 2018. The Relationship between Perception toward Negative Feedback Giving and Intention to Use Negative Feedback for Job Improvement of Generation Y Employee. Veridian E-Journal, Silpakorn University (Humanities, Social Sciences and arts), 11(4), pp.561-573.
Kusrini, E., Novendri, F. and Helia, V.N., 2018. Determining key performance indicators for warehouse performance measurement–a case study in construction materials warehouse. In MATEC Web of Conferences (Vol. 154, p. 01058). EDP Sciences.
Ng Corrales, L.D.C., Lambán, M.P., Morella, P., Royo, J., Sánchez Catalán, J.C. and Hernandez Korner, M.E., 2022. Developing and Implementing a Lean Performance Indicator: Overall Process Effectiveness to Measure the Effectiveness in an Operation Process. Machines, 10(2), p.133.
Omar, M.F., Roshidi, S.A., Jamil, J.M., Kamal, F., Nawi, M.M. and Radzuan, K., 2019. Towards designing tools for universities’ R&D performance measurement on Mobile Platform.
Rehman, S.U., Mohamed, R. and Ayoup, H., 2019. The mediating role of organizational capabilities between organizational performance and its determinants. Journal of Global Entrepreneurship Research, 9(1), pp.1-23.
Ruli, C. and Kristanto, H., 2021. Implementation of balance scorecard and key performance indicator on customer service employee productivity. EUREKA: Social and Humanities,(4), pp.26-32.
Tambare, P., Meshram, C., Lee, C.C., Ramteke, R.J. and Imoize, A.L., 2021. Performance Measurement System and Quality Management in Data-Driven Industry 4.0: A Review. Sensors, 22(1), p.224.
Verhaelen, B., Mayer, F., Peukert, S. and Lanza, G., 2021. A comprehensive KPI network for the performance measurement and management in global production networks. Production Engineering, 15(5), pp.635-650.
Zelga, K.E., 2018. Key Performance Indicator as a Type of Performance Measurement-Analysis of a Chosen Enterprise. Acta Universitatis Nicolai Copernici. Zarz?dzanie, 45(1), pp.127-135.
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