Strategic Management and Human Resource Management

What is a KPI?

A key performance indicator (KPI) is a quantifiable measurement used to gauge overall long-term performance. It is a subset of business metrics. They are useful in determining a company’s strategic, financial and operational achievements.

What is a business metric?

A business metric is a measurement of business processes. It includes KPIs, but not all business metrics are KPIs.

What are SMART goals?

• Specific: What do you want to accomplish? Who needs to be included? When do you want to do this? Why is this a goal?

• Measurable: How can you measure progress and know if you’ve successfully met your goal?

• Achievable: Do you have the skills required to achieve the goal? If not, can you obtain them? What is the motivation for this goal? Is the amount of effort required on par with what the goal will achieve?

• Relevant: Why am I setting this goal now? Is it aligned with overall objectives?

• Time-bound: What’s the deadline and is it realistic?

What are some examples of goal-setting frameworks?

• SMART goal setting

• Objectives and Key Results (OKR)

• Management by Objectives (MBO)

• The Balanced Scorecard

What are Objectives and Key Results (OKR)?

Pairs objectives you want to achieve with the key results you’ll use to measure progress:

• Objective: The goal you want to achieve.

• Key Result: Metric by which you’ll measure progress towards your objective.

What is Management by Objectives (MBO)?

A process in which a manager and an employee agree on specific performance goals and then develop a plan to reach them. Designed to align objectives throughout an organisation and boost employee participation and commitment. It is a five-step process:

1. Define objectives

2. Share objectives with employees

3. Encourage employees to participate

4. Monitor progress

5. Evaluate performance and reward achievements

What is the Balanced Scorecard?

A methodology of measuring a company’s performance beyond its financial outcomes. It comprises four main dimensions of an organisation:

• Financial perspective: Comprises finances and how the business looks to shareholders.

• Customer perspective: How well the business serves customers and how customers perceive the business.

• Internal business perspective: How the business runs its operations and what the business goals are.

• Innovation and learning perspective: How well the business prepares for future growth, and whether it can continue to improve and create value.