Monday, April 6, 2009

Key Performance Indicators (KPIs) & Key Risk Indicators (KRIs)

Key Risk Indicators (KRIs) are an interesting concept, or twist to Key Performance Indicators (KPIs).  Instead of thinking of KPI measuring performance, think of a KPI as really just an indicator that the objective is at risk.  They are really the same thing.

If your objective is to Maintain Salesforce Effectiveness, a solid indicator might be revenue per sales rep.  If our revenue per sales rep is declining, it should be treated as a trigger for a broader discussion on the objective, not necessarily the KPI.  At the same time, we will want to analyze a number of other performance indicators for a deeper, richer discussion.

When we look at KRIs for example employee turnover is this not just a performance measure against the objective Retain Great Employees?  

In the end though, we are just splitting hairs by calling something a KPI or KRI.  It matters far more that we have the discussion about the objective(s), than trying to build seperate processes to measure subtle nuiances.

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