Remember the Balanced score card and the strategy map? In the strategy map the drivers are the trained and motivated employees who work as per well defined internal and external processes to deliver products or services which result in performance which can be measured by financial metrics like ROCE or ROE.
As per an article I read today, Key Performance Indicators(KPI) cannot be a financial metric and need to be something which management keeps a tab on every day and every hour. Every employee is in some way responsible for the KPI. Example KPIs are late arrival of flight, customer satisfaction etc. Is it possible to monitor financial metrics every hour and is the investment in such a system economical?
An example Key Results Indicators (KRI) can be the Dupont formula or ROE which can be subsequently decomposed into net profit margin, asset turnover and degree of financial leverage( asset/Equity). Performance indicators can be number of employee suggestions etc. The article also downplayed the causality angle or lead (driver)-> lag (result) analysis method and used the metric late arrival of flight to prove the point. Is this metric a lead or lag indicator?
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