Most Common Types of Performance Indicator

Most Common Types of Performance Indicator

Performance review forms part of quarterly or annual practice in most organizations or businesses. The end goal of every entity or company is to achieve tremendous growth; no one will be contented with regression and lack of growth, after investing a lot in human and capital resources. At the beginning of a calendar year, most employers set goals and targets for the short and long run. How do you measure the performance of a particular employee or department? How do you determine financial gains made? How do you compare and contrast input and output? These are some of the questions that come invoke when an organization contemplates carrying out performance reviews. However, there are specific forms of indicator that may suffice in this regard.

The different types of performance indicators enable firms and enterprises to ascertain if they’re making progress or not. In addition, they get to know areas they excelled in, as well as areas they need to re-strategize. Also, performance indicators enable organizations to make changes when needed; these changes can be in form of policy, personnel, or leadership style. Relatively, performance indicators provide much-needed data for improving the customer experience, boosting sales, lowering production costs, acquiring new markets, and more.


Meaning of Performance Indicator

A performance indicator, also known as a key performance indicator is a type of performance measurement. Performance indicators evaluate the success of an organization or of a particular activity (such as projects, programs, products, and other initiatives) in which it engages. Often, success is simply the repeated, periodic achievement of some levels of operational goal (e.g. zero defects, 10/10 customer satisfaction), and sometimes success is defined in terms of making progress toward strategic growth. Therefore, choosing the right performance indicators relies upon a good understanding of what is important to the organization. What is deemed important often depends on the department measuring the performance. For instance, the performance indicator useful to finance will differ from the key performance indicator assigned to information technology.


Characteristics or Elements of Performance Indicators

A good performance indicator should have specific features and elements to be reliable and effective, these include;

Specificity: Performance indicators need to be specific enough that the information gathered will be relevant, and provide information that you can act on.

Measurable: The best performance indicators are numeric or can be measured in a quantifiable way.

Attainable: The objectives and goals that refer to them must be achievable and attainable.

Realistic: They should respect, reflect, and be relevant to the company’s vision and strategy.

Timely: Its duration must be defined.


Commonly Used Types of Performance Indicators

Enumerated below are the types of performance indicators used by organizations and businesses;

  • Commercial performance indicators (sales and marketing)
  • Organizational performance indicators
  • Financial and accounting performance indicators
  • Internet, social media, and e-commerce performance indicators
  • Performance indicators for supply chain, inventory, and logistics
  • Information technology performance indicators

Commercial performance indicators (sales and marketing): Marketing and sales form part of businesses and organizations. A commercial performance indicator is used to measure the success or not of sales and marketing. This type of indicator identifies and monitors an organization’s business activities. Relatively, this indicator gathers data and allows you to explore several strategic axes. In addition, they enable you to validate several hypotheses relating to your commercial strategy. Specifically, commercial performance indicators measure the revenue generated according to the production lines. It also evaluates an organization or business’s potential to acquire new market shares. Similarly, this category of performance indicator calculates and determines the productivity of a company’s production line(s). The production capacity of new productions on your assembly line can also be measured and evaluated here.

Organizational performance indicators: Areas for improvement in a business or firm can be identified using an organizational performance indicator. Additionally, these indicators are mastered mainly by those responsible for human resources. They are specifically used to facilitate the control of payroll costs and production capacity. However, it is still possible to formulate organizational performance indicators to highlight issues that concern the workforce, such as the rate of absenteeism, the cost of integrating new employees, the level of performance of each employee, and employee turnover rate among others.


Financial and accounting performance indicators: Organizations and businesses make a series of investments as part of their daily, weekly, monthly, quarterly, or annual running. There are specific indicators that can be used to measure the success or otherwise of such investments. Financial and accounting performance indicators can also be used to check if the books are balanced or not. In addition, financial performance indicators provide the necessary tools for organizations to evaluate and see how healthy the finances of the company are. Depending on the sector of activity, these indicators can be used for the evaluation of return on investment, return rate, working capital requirements, cash flow plans, and management of accounts receivable.

Internet, social media, and e-commerce performance indicators: If you are an organization that uses the internet and social media in its marketing strategy, you are probably already familiar with this type of performance indicator. However, to what extent you use these forms of indicators to diagnose your results is a question that beckons. When used properly, such indicators help bridge the gap between the efforts invested in the digital promotion of your products and your sales performance. These metrics become the voice of your target market by highlighting different audience behavior, and their level of engagement with your brand. Relatively, performance indicators are used to measure;

  • The data on new individuals that visit the site.
  • The volume of traffic generated at cost per length.
  • The total or average length of a visit to your website.
  • The product, goods, or services with the most views.
  • The total number of shopping carts that were abandoned or incomplete.
  • The click-through rate of online advertising campaigns.


Performance indicators for supply chain, inventory, and logistics: There are specific performance indicators for manufacturing companies or institutions; these indicators are used to measure the success of supply chains, inventories, and logistics. Also, the aforementioned performance indicators enable you to have increased control of inventories and the turnover of your merchandise. When you analyze the key measures of your supply chain, you will be able to target the inherent problems faced by companies and organizations in their logistics and inventory management. Additionally, these indicators provide information and data on warehousing, delivery, and order production as well.

Information technology (IT) performance indicators: The use of information technology has become a mainstay in most organizations and businesses. Therefore, there are specific performance indicators that can be used to improve the use of IT. Also, these indicators help you to measure the performance, progress, and success of your organization’s technology activities. Similarly, these indicators are essential for organizations that want to use technology solutions to optimize and make their business processes profitable and more attractive to clients and customers. Relatively, these indicators can be used to calculate the total cost of the technology solutions in comparison to the profits and gains made from productivity and revenue generated. Information technology indicators can also be used for;

  • Determining the security of an organization’s information technology systems.
  • Assessing the impact made by IT, and issues generated from using information technology.
  • Evaluating the performance of information technology infrastructure.
  • Checking the availability of information technology systems.

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