Calculating the KPI – the easy way

Dr Arriffin Mansor

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What is KPI?

• The efficiency indicator at output or outcome phase.

• How much output are you generating with a given input?

• An example of KPI for the CEO is the ROE i.e Return on equity.

• ROE shows how much profit return is generated from an equity of RM1.

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What is KPI in graphic?

Input ROE line

Output

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What is KPI in graphic?

Equity ROE line

Profit

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What is KPI in graphic?

Equity ROE line

Improve d ROE line

Profit

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What is KPI in graphic?

Equity ROE line 30%

Improved ROE line

40%

100

30 40 Profit

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Accounting KPIs drawn from the financial statements

• Marketing• Production• Personnel• Finance

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Performance figures

• Input Costs• Output Targets• Key Performance Indicators• Performance change and value• Eliminating the change in input volume• Intervention impact and its costs

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The benefits of performance measures

• Proper delegation and Accountability• Identify performers and determine their

incentives.• Measure performance and relate it to its

relevant costs• Measure performance improvement• Benchmarking and performance standards

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What is KPI in graphic?

Input KPI

KPI2

After

Before

Before After Output

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What is KPI in graphic?

Input KPI

KPI2

After

Before

Before After Output

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Sale per ringgit Advertising

Advertising Sales/advertising

KPI2

After

Before

Before After Sales

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Sale per ringgit Advertising

Advertising Sales/advertising

KPI2

After

Before

Before After Sales

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Benefits of the KPI in graphic

• Understand KPI in terms of output input causal relationship

• Compute the change in input and output• Compute the output input ratio i.e ROI to

justify the need for intervention.

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Thank you

Question please