Abstract
Organizations constantly strive to improve what they do and how they do it. The results of their improvement efforts are measured through key performance indicators (KPIs). Much mystery surrounds the formation, correct reporting and interpretation of KPIs. This paper suggests that KPIs can be decomposed into key performance outcomes (KPOs) and key performance drivers (KPDs). What links the KPOs (the outcomes) and the KPDs (the drivers) are business processes. KPOs measure progress towards corporate objectives and have been the subject of much research and study. KPDs, which provide in-process measurement and have a direct bearing on the KPOs, have received far less attention. This paper proposes several new tools for linking KPOs and KPDs and suggests that (a) performance indicators are essentially a process issue, (b) the 'where' of measurement should be considered along with the 'what' and the 'how' of measurement and (c) the focus of business improvement efforts should be on the drivers, not the outcomes.
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