The Four Types of Performance Measures
From my research over the past 30 years I have come to the conclusion that there are four types of performance measures and thus it is a myth to consider all measures are KPIs. These four measures are in two groups: result indicators and performance indicators.
I use the term result indicators to reflect the fact that many measures are a summation of more than one team’s input. These measures are useful in looking at the combined teamwork but, unfortunately, do not help management fix a problem as it is difficult to pinpoint which teams were responsible for the performance or nonperformance.
Performance indicators, on the other hand, are measures that can be tied to a team or a cluster of teams working closely together for a common purpose. Good or bad performance is now the responsibility of one team. These measures thus give clarity and ownership.
With both these measures some are more important, so we use the extra word “key.” Thus, we now have two measures for each measure type:
- Key result indicators (KRIs) give the board an overall summary of how the organization is performing.
- Result indicators (RIs) tell management how teams are combining to produce results.
- Performance indicators (PIs) tell management what teams are delivering.
- Key performance indicators (KPIs) tell management how the organization is performing 24/7, daily or weekly in their critical success factors and, by taking action, management is able to increase performance dramatically.
Many performance measures used by organizations are, therefore, an inappropriate mix of these four types. First, I will describe each type of measure.
Source: Extracted from