What’s on the minds of other process and knowledge practioners? Ask Us Answered is an APQC blog series that shares a sample of the questions members submit to APQC’s Ask Us service along with the resources and expertise provided. If you’re an APQC member and have a question you’d like us to answer please Ask Us!
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Question (a good refresher!): In an effort to be more intentional and precise with how key terms are defined, a member in the textile industry asked APQC to point out a distinction between a KPI, a measure, and a metric stating some believe they are one in the same and can be used interchangeably and others believe there is a distinction.
Answer: All are related, but are distinct. A metric is the numeric value of a measure, and a KPI is a type of measure. Here are our definitions for the three concepts:
Measure–a specific, defined observation on the performance of a process (e.g., Personnel cost to perform the finance function per $1,000 revenue). The four primary measures categories include:
- Cost effectiveness—provides information concerning how well operating cost are managed
- Staff productivity—provides insights into how much output each full-time equivalent employee (FTE) has produced
- Process efficiency—provides insights into how well procedures and systems are supporting the operation
- Cycle time—indicates the duration to complete a task
Metric–the quantifiable elements that result from measuring the performance of a process. Most commonly reported as a number, percent, or ratio (e.g., $1.67)
Key Performance Indicator (KPI)—a specific, high-level measure used to gauge a quantifiable component of an organization’s performance.
- KPIs are of strategic importance, result from operational objectives, and are central to measuring the impact on key stakeholders (e.g., stockholders, customers, and employees).
- KPIs typically correspond to the organization’s critical success factors and business goals.
- There is typically a single KPI backed by supporting indicators used to manage and monitor performance.
The below is a sample metrics report created with APQC’s Benchmarks on Demand Tool (access is for members only) showing the relationship between a measure, KPI, and metrics.
You can find these and other benchmarking and measurement related definitions in our:
Resources provided by APQC expert, Holly Lyke-Ho-Gland, Principal Research Lead, Process and Performance Management. You can follow Holly on Twitter @hlykehogland.