The Core Of The Business Performance Evaluation System

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As the core of the business performance evaluation system, Key Performance Indicators (KPI) is a scientific and effective method to manage and evaluate its performance, based on extracting the key performance indicators within the organization. It is a process of the top-down decomposition on indicators from the organization to individual. The essence is to break down the business strategic goal into a series of operational targets. It is a basic work in business management. The theory base was derived from the 20/80 principle in economics proposed by Italian economist named Pareto. According to the principle, as long as the 20% critical indicators are seized, the evaluation main body is grasped, and the value and profit of a business is…show more content…
It is actually very important for organization management and development to make all the employees work hard in the same direction in the lowest cost and the most effective way. Periodically reviewing by right KPI, the business owners, managers can effectively track the work status of implementation and see if any fine tuning needs to be done. At the same time the business can compare with other outstanding companies by using KPI and find potential issues for improvement timely. If the business is able to take care of the balance in every aspect in promoting KPI, the employees will change with its implementation. They will not only regard profit and other financial goals as a primary task, but also will attach greater importance to customer satisfaction. It is very beneficial to the business development. Principles of Setting Key Performance Indicators It is one of the important tasks for the business to improve performance at small profit era of intense competition. With the help of KPI, the business will have a more clear development focus and achieve the goal of maximizing performance. Since KPI is so important, how do the business owners find the right KPI? There is an important SMART principle in setting KPI for the business. The five capital letters represent specific, measurable, attainable, relevant, time bound respectively. They are all connected with each other tightly in developing the work
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