Top 25 Cost Analysis KPIs 2018 Online PDF

TOP 25
COST ANALYSIS KPIs

2018 edition
$ Working capital per employee % Cost of the finance function from revenue
$ Cost of goods sold (COGS)% Obsolescence costs from total inventory
% Gross profit margin % Operating costs $ Payroll tax paid by the employer
# Interest cover % Contribution margin ratio % Overhead cost ratio
# Cost improvement plans $ Fixed costs $ Spent on equipment
$ Life cycle cost (LCC) # Sales to general and administrative expenses
$ Operating expenses $ Cost accrual ratio $ Indirect costs
$ Total acquisition cost (TAC) % Wages cost from sales
$ Fixed cost per employee $ Overdue invoices $ Discretionary costs
$ Costs per FTE employee % Cost with employees from the operating revenue
Publication date: - September 2018

ID number: sK0188481
INDEMNITY STATEMENT
© 2018 The KPI Institute Ltd. All Rights Reserved.
ID number: sK0188481
ISBN-13: 978-1724947673
ISBN-10: 1724947672
This report is the result of primary research conducted by The KPI Institute. It is available in PDF format on the smartKPIs.com
website. Terms of use available at: http://www.smartkpis.com/terms-of-use.html (‘Premium content terms’).
An appropriate citation for this report is:

The KPI Institute (2018), Top 25 Cost Analysis KPIs - 2018 Edition, Melbourne, Australia
Indemnity statement
The KPI Institute has taken due care in preparing the analysis contained in this report. However, noting that some of
the data used for the analysis has been provided by third parties, The KPI Institute gives no warranty to the accuracy,
reliability, fitness for purpose, or otherwise of the information. The KPI Institute shall have no liability for errors, omissions
or inadequacies in the information contained herein or for interpretations thereof. The opinions expressed herein are
subject to change without notice. For the latest version of the documentation, smartKPIs Premium should be consulted.
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Page 2 www.kpiinstitute.org
FOREWORD
Simplicity. Something that is easy to understand or pass practices as organizational structures. So, simplicity…
on forward is simple, as opposed to something arcane and simplicity does not come easy in an organization. Unless,
complicated. How do we arrive at the point when it gets you give it simple tools to work with.
simple organization wise? Of late, a question of particular
interest in both private and public environments. The pure definition of a KPI is “simplicity”. Mathematical
enough to allow logical reasoning, but also easy enough to
Most common also, we found the use of simplification as read through a complicated story, KPIs are in themselves
an organizational strategy. Safe to say, that simplification an auxiliary language. Such a language that it makes it
is the new “it” of organizational practices, most often easier to skim through organizational layers and functions
seen in the streamlining of organizational structures, with the ultimate ability to understand what is happening.
more disciplined operational processes, and improved This clarity, in turn, gives one the opportunity to look
managerial habits nevertheless. beyond the failure and see the causes, to spot the tie-ins
leading the downturn, to decide and communicate future
Our definition of simplicity, however, still remains the actions, to take initiatives in common momentum.
KPI. There is an entire system proven functional, that we
have build on KPIs, not because it guarantees success or There are rewards in learning from failure, and there is
drives profitability levels of the roof, but because it makes simplicity that comes with learning. In more than many
it easier to communicate with one another. Organizations ways, learning organizations are prone to find simplicity
almost never find it simple or easy because they fail a faster than others. This mainly because of their acceptance
lot. They fail at managing change, they fail at structuring of new systems, mechanisms and tools that are designed
their processes, they fail at inspiring employees to build to introduce novel perspectives.
tenure and many more. They fail mostly because they do
not manage to get through the chaos. A measurable expression for the achievement of a
desired level of results, KPIs make objectives quantifiable,
More than a decade of research and experience has and provide visibility into the performance of various
shown us how exceedingly different organizations can organizational functions. KPIs drive accountability
be, amazingly not only compared to competitors or peers, because they are understood by everyone. KPIs enable
but also internally, one organizational layer compared smart decision-making because they speak the language
to another. There can be as many mindsets inside an of decision-makers. KPIs are easy. One just has to learn
organization as departments, as many processes and about them.
Top 25 Cost Analysis KPIs - 2018 Edition Page 3

TABLE OF CONTENTS
Section I 6
How to Use This Report 6
Report Structure 7
Report Highlights 8
Section II 10
About The KPI Institute 10
smartKPIs.com Community Profile 12
2018 smartKPIs.com Functional Areas Taxonomy 14
2018 smartKPIs.com Industries Taxonomy 15
Section III 16
KPI…Naturally 16
About Key Performance Indicators (KPIs) 18
Advice on KPI Selection 20
KPI Documentation Guidelines 22
Target Setting: From Theory to Practice 24
Data Gathering Dimensions 26
Enhancing Performance Data Through Visualization 28
Data Analysis 30
KPI Reporting 32
Section IV 34
Cost Analysis Functional Area 34
Top 25 Cost Analysis KPIs of 2016-2018 35
Template description: page1 36
Template description: page2 38
$ Working capital per employee 40
% Cost of the finance function from revenue 42
$ Cost of goods sold (COGS) 44
% Obsolescence costs from total inventory 46
% Gross profit margin 48
% Operating costs 50
$ Payroll tax paid by the employer 52
# Interest cover 54
% Contribution margin ratio 56
% Overhead cost ratio 58
# Cost improvement plans 60
$ Fixed costs 62
$ Spent on equipment 64
$ Life cycle cost (LCC) 66
# Sales to general and administrative expenses 68
$ Operating expenses 70
$ Cost accrual ratio 72
$ Indirect costs 74
$ Total acquisition cost (TAC) 76
% Wages cost from sales 78
$ Fixed cost per employee 80
$ Overdue invoices 82
$ Discretionary costs 84
$ Costs per FTE employee 86
% Cost with employees from the operating revenue 88
Section V 90
Appendix A: Related Reports 90
Appendix B: Reference Collection of Books 92
Appendix C: Performance Management Toolkits 94
Appendix D: Performance Magazine 95
Appendix E: Memberships 96
Appendix F: Subscriptions 97
Appendix G: Training Courses 98
Appendix H: Skills Academy 100
Appendix I: Advisory Services 102
Appendix J: Audit 104
Appendix K: Software 106
Appendix L: Glossary of Terms 108

SEC I HOW TO USE THIS REPORT
Purpose of the report Readership profile
The Top 25 KPIs Reports are aimed at sharing the KPI The Top 25 KPIs Reports are intended for practitioners,
Institute’s valuable knowledge regarding the use of KPIs academics and consultants who are professionally engaged
in measuring performance. The purpose of the report with the Performance Management discipline. The reports
is to introduce readers to the most popular KPIs in the are committed to any individual or organization that may
industry or functional area they operate in. Moreover, the find reason into both researching and strengthening
goal of this report is to provide readers with a practical their knowledge on KPIs and performance measurement
step-by-step guide to enhancing performance by simple practices.
recognition of the added clarity, focus and improvement
KPIs bring to any performance measurement process. The KPI Documentation Form template
As much as they are a valuable resource for harvesting The 2018 Edition of the Top 25 KPIs reports presents
Key Performance Indicators for any organization, the Top a two pages’ design of the KPI Documentation Form
25 KPIs Reports are not designated to supply readers with Template. The first page contains updated fields of the KPI
the ultimate solution to establishing the right KPIs for Documentation form as researched and analyzed by The
their organizations. The Top 25 KPIs Reports are merely KPI Institute. The second page of the KPI Documentation
a collection of the most popular KPIs in the functional form includes valuable guidance on KPI Reporting, based
area/industry that the report is intended for. Conveyed on actual exemplification of KPI results and pertinent
from smartKPIs.com.com, the Top 25 KPIs selected for illustrations of Scorecard and Dashboard designs for each
each report, are a collection of the most viewed KPIs of the KPIs included in the report.
in a particular functional area or industry, based on site
statistics and online community readings.
REPORT STRUCTURE
The Top 25 KPIs Reports are structured to include 5 main sections:
Section I
Introduction: Briefly describes the purpose of the report, as well as, clarifies its structure to the readership.
Section II
Overview of the smartKPIs.com platform: Provides a brief description of the smartKPIs.com community profile, by
country breakdown, organization size, industry affiliation, job title, managerial role, and performance related job titles.
The smartKPIs.com taxonomy, takes the reader further into the functional areas and industries that The KPI Institute
has researched for the last 8 years.
Section III
Insights into the world of KPIs: Ensures a deep understanding of the main stages involved in the process of establishing
KPIs for the organization. The section takes the reader on a compelling journey that starts with the clarification of
the common KPI terminology and moves forward with a description of the KPI selection process, guidelines for KPI
documentation, as well as, a brief tutorial into setting KPI targets. Culminating with the much-anticipated matter of KPI
use for decision-making, this section further introduces the reader to the multiple dimensions of data gathering, data
visualization, analysis and reporting.
Section IV
Top 25 KPIs of the functional area/industry for which the report is intended: Itemizes the Top 25 KPIs of the functional
area/industry for which the report is intended, as per the popularity of the selected indicators on the smartKPIs.com
platform. The section provides the reader with an updated documentation form for every KPI. Additionally, with extended
versions of the reports, actual guidance on KPI reporting, as well as, “in practice” advice on generating the most value
out of the KPIs analyzed, is provided.
Section V
Testimonials and related educational resources: Encompasses an extensive list of motivational beliefs, as well as,
invaluable publications and educational programs that readers can use in their further explorations of the performance
management discipline.
V
I III RELATED
EDUCATIONAL
INTRODUCTION RESOURCES
INSIGHTS INTO
THE WORLD OF IV
II KPIS
TOP 25 KPIS
OVERVIEW OF CATALOGUE
THE SMARTKPIS.
COM PLATFORM

REPORT HIGHLIGHTS
Given the economic context and the methodological a basis for the hereby presented research report. By
advancements of today, organizations increasingly clarifying KPI terminology and further enhancing common
focus on managing and measuring performance as a knowledge regarding the use of KPIs today, the Top 25
key component in achieving the desired performance KPI Reports – 2018 Edition are meant to encourage
results for generating business value. Key Performance analytical thinking, as well as, decision-making based on
Indicators (KPIs) embody the critical component of data.
modern performance management and measurement
systems. As such, there are many organizations today that The 2018 Edition of Top KPIs reports is intended to
have diverse performance management initiatives, which cover a number of 16 functional areas and 24 industries
measure organizational performance against desired including: accounting, corporate services, corporate
results through KPIs. To provide a glimpse into the use social responsibility, finance, governance, compliance and
of KPIs in practice, The KPI Institute has launched its first risk, HSSE, human resources, information technology,
edition of Top KPI reports in March 2011. The reports knowledge and innovation, management, marketing and
were dedicated to analyzing the most popular KPIs across communication, online presence – eCommerce, portfolio
major functional areas and industries. and project management, production and quality
management, sales and customer service, supply chain,
The Top KPIs report series, have now reached their procurement, distribution, agriculture, arts and culture,
fourth and improved edition, while reflecting on the construction and capital works, customs, education and
enriched experience of The KPI Institute’s editorial team training, financial institutions, government state and
in publishing such reports. local, healthcare, hospitality and tourism, infrastructure
operations, manufacturing, media, non-profit/non-
The hundreds of thousands of visits on smartKPIs.com governmental, postal and courier services, professional
and the thousands of KPIs visited, bookmarked and rated services, publishing, real estate/property, resources,
by members of the online community in these last years retail, sport management, sports, telecommunications/
provided a rich data set, which combined with further call center, transportation, utilities.
analysis from The KPI Institute’s editorial team, formed
Value added by Top KPIs Reports to practice
REPORT PURPOSE RESULT

CONTENT Enable learning Improved Performance
Best practices Measurement
Competencies
The Top 25 Cost Analysis KPIs – 2018 Edition report not only 2 pages of detailed documentation for each KPI,
compiles the most popular 25 KPIs used by global cost but also interesting articles on best practices in terms of
analysis divisions throughout 2016 and 2018. The KPI selection and documentation. A new and improved
methodology used to advance this report consisted of collection of the most popular cost analysis KPIs on
ranking the KPI examples documented and published on smartKPIs.com, the Top 25 Cost Analysis KPIs-2018
smartKPIs.com, based on the number of views acquired Edition introduces a distinctive, unprecedented design
in the period mentioned. of the KPI Documentation Form. Specifically developed
to take the reader one step closer to an efficient KPI
One of the most important benefits that this report monitoring and reporting process, the Top 25 Cost
brings is an international perspective on the most Analysis KPIs -2018 Edition makes for a valuable addition
popular Cost Analysis KPIs. They provide quantifiable to any KPI Library used by professionals in the financial
measurement of the main components that lead to field.
a successful financial strategy implementation. The
documentation of KPIs compiles both academic insights By emphasizing the use of KPIs today, The Top 25 Cost
and practitioner experience in working with these Analysis KPIs – 2018 Edition is a valuable resource for any
performance management tools. Furthermore, Top 25 professional looking to refresh an existing performance
Cost Analysis KPIs – 2018 Edition provides a complete measurement system or to promote the use of KPIs in
hands-on experience in working with KPIs as it contains the organization.
Top 5 Cost Analysis KPIs of 2016-2018
$ Costs of goods sold (CDGS) 232
% Operating costs 225
% Obsolescence costs from total 200

inventory
$ Payroll tax paid by the employer 185
REPORT
HIGHLIGHTS

SEC II ABOUT THE KPI INSTITUTE
The KPI Institute is a leading global research institute specialized in business performance. It operates research programs
in 12 practice domains, ranging from strategy and KPIs to employee performance and from customer service to
innovation performance. Insights are disseminated through a variety of publications, subscriptions services and through
a knowledge platform available to registered members. Support in deploying these insights in practice is offered globally
through training and advisory services.
Key Figures
ORGANISATION
2004 12 4
Year of establishment Research Analysts Offices around the globe:
Australia, Malaysia, Romania, United Arab Emirates
RESEARCH
88,085 21,150 14
Organizations assisted through KPI examples published on Years spent on researching
smartkpis.com smartkpis.com performance best practice
EDUCATION
11,272 1,569 8,523

Training hours delivered Client organizations Professionals trained
569 78 5
Education programs delivered Countries where we delivered Continents where we served clients
educational programs
The KPI Institute is considered today the global authority on Key Performance Indicators (KPIs) research and education. It
developed the first KPI Management Framework and operates www.smartKPIs.com, the result of the research program
dedicated to documenting and cataloguing how KPIs are used in practice, an online portal containing the largest collection
of documented KPI examples.
Our Pillars
 Research  Events
The most comprehensive collection of resources, Conferences, forums and executive meetings
research studies and tools to enable organizations reaching globally that bring new trends and
to be always at the top of the game in their developments, industry best practices and the
industry. most innovating solutions in today’s business
environment.
 Publications
In-depth reports, articles and templates that  Benchmarking
enable you to keep up to date with industry Benchmarking studies that ensure you stay ahead
trends and leaders. of your competition, identifying opportunities to
maximize results.
 Learning
Specialized training programs meant to shed light  Awards
on the essential insights and practical tools that The KPI Institute recognizes customers and
improve business performance. partners that have excelled in driving business
value through several award categories.
 Certification
Certification Programs designed to support  Consulting
professionals to achieve business excellence in By embedding research outcomes and practical
12 different practice domains that range from experience from the business environment, The
strategic planning and performance management KPI Institute offers high quality advisory services
to data visualization and innovation. to guide organizations towards achieving their
ultimate vision.
 Networking
Access to a wide Community of Practice  Solutions
where professionals share their knowledge and Sustainable technology solutions to support
expertise. The KPI Institute provides the perfect business processes and ensure agility in working
environment to keep up with the latest trends and with data in today’s business environment.
events in the field of performance.

SMARTKPIS.COM COMMUNITY PROFILE
Since its launch in 2009, smartKPIs.com established itself as the favorite destination for professionals around the world
interested in high quality documented examples of metrics. With hundreds of thousands of page views and more than
79,000 members from 250 countries, smartKPIs.com is one of the most used performance measurement resources
online.
What sets the smartKPIs.com community apart is the profile of its members, as it is a truly global community, with
relatively uniformly spread representation in terms of membership around the world. While the highest number of
members come from English speaking countries, no single country dominates in terms of representation. The same
applies in terms of organizational size, as smartKPIs.com memberships are popular among small size companies (11-100
employees), but also across medium and large organizations (+10,000 employees).
 United States - 15.35%  United Arab Emirates - 3.67%  Malaysia - 3.55%

 Canada - 2.88%  Saudi Arabia - 3.95%  Australia - 6.48%
 United Kingdom - 5.03%  India - 11.64%  Other - 42.79%
 South Africa - 2.21%  Indonesia - 2.43%
9
4 7
10
2 6 8
1 3
Throughout 2016 and 2018, the smartKPIs.com community has experienced a growth of more than 10%. The increase discloses
a rising demand for performance measurement tools. The fascination with KPIs is also reflected in the increasing number of views
recorded by the site in the period afore-mentioned.
In terms of industry affiliation, the majority of smartKPIs.com community members operate in the Consulting industry. The
Technology and Manufacturing industries closely follow in the hierarchy, which reflects on the steadfast interest for KPIs within
these areas. Throughout 2016 and 2018, we can observe a substantial increase in the number of subscribers affiliated to the
banking, mortgages and credit, which points to a tendency
Job Title
of transitioning to KPI based management systems in this
industry.
CEO 1.67%
Organization size (by no. of employees)
Student 2.69%
10000+ 13.13% IT Manager 3.65%
5001-10000 5.54% HR Manager 4.57%
1001-5000 13.94% Business Analyst 4.60%
501-1000 9.71% Director 7.22%
101-500 19.73% Consultant 7.50%
11-100 20.27% Manager 27.20%
1-10 9.78% Other 40.88%
Self-employed 7.90%
The breakdown for the subscribers’ job positions reflects
a higher than average representation for Technology
Industry affiliation and Human Resources managers, while community
membership is dominated by managers, consultants and
Government - Local 1.50%
directors. Overall, the community profile of smartKPIs.
Insurance 1.53% com reveals a diverse and highly qualified membership
base.
Not-for-profit 1.79%
Government - State 2.11% Managerial role

& Federal
Constructions / 2.43%
Capital Works Operations Manager 0.58%
Energy 2.93%
Project Manager 1.92%
Banking, Mortgages 3.11%
& Credit IT Manager 3.65%
Retail 3.27%
HR manager 4.57%
Telecommunications 3.39%
Manager 27.20%
Engineering 3.41%
The analysis of smartKPIs.com community profile reveals
Transportations/ 3.45%
Logistics that positions like Strategy Manager or Performance
Finance
Management Officer are not yet very well legitimated
3.66%
within organizations, in many cases these roles are
Healthcare 4.48% assimilated by other positions. Only 0.89% and 0.96%
our members are officially occupying a strategy or
Education/Training 5.24%
performance management position.
Manufacturing 8.26%
Performance/Strategy Professionals
Technology 9.03%
Consulting Strategy related 0.89%

11.75% job titles
Other Performance related 0.96%
12.53% job titles

2018 smartKPIs.com Functional Areas Taxonomy
16 Functional Areas with 61 Main Functions
Accounting (331)
 Cash Management (44)  IT-Security (130)
 Control (19)  Network Management (62)
 Cost analysis (53)  Service Management (225)
 Accounting Systems (39)
 Planning and Reporting (85) Knowledge and Innovation (210)
 Transactions/Accounts Payable/Accounts Receivable (91)  Innovation (46)
 Knowledge Management (71)
Corporate services (165)  R & D (93)
 Administration/Office Support (25)
 Corporate Travel (28) Management (80)
 Facilities/Property Management (78)
 Legal Services (34) Marketing & Communications (245)
 Marketing (173)
Corporate Social Responsibility (76)  Public Relations (37)
 Advertising (35)
Finance (261)
 Asset/Portfolio Management (66) Online Presence - eCommerce (230)
 Financial Stability (43)  eCommerce (50)
 Forecasts & Valuation (57)  Email Marketing (26)
 Liquidity (32)  Online Advertising (34)
 Profitability (63)  Online Publishing - Weblogs (27)
 Search Engine Optimisation (SEO) (28)
Governance, Compliance and Risk (191)  Web Analytics (65)
 Compliance and Audit Management (57)
 Governance (68) Portfolio and Project Management (122)
 Risk Management (66)  Benefits Realization Management (11)
 Portfolio Management (53)
HSSE (Health, Safety, Security and Environment (325)  Project Management (58)
 Environment (171)
 Health & Safety (126) Production & Quality Management (207)
 Security (28)  Maintenance (39)
 Production (97)
Human Resources (504)  Quality Management (71)
 Compensation and Benefits (53)
 Efficiency and Effectiveness (49) Sales and Customer Service (322)
 Recruitment (78)  Customer Service (144)
 Retention (30)  Sales (178)
 Service Delivery (36)
 Talent Development (123) Supply Chain, Procurement, Distribution (497)
 Workforce (82)  Contract Management (51)
 Working Environment (53)  Inventory Management (93)
 Logistics / Distribution (187)
Information Technology (639)  Procurement / Purchasing (101)
 Application Development (81)  Supply Chain Management (65)
 Data Center (38)
 Enterprise Architecture (47)
 IT-General (56)
*The figures in brackets represent the number of documented KPI examples available on smartKPIs.com as of 1st of January 2018.
2018 smartKPIs.com Industries Taxonomy
25 Industries with 100 divisions
Agriculture (308)  Healthcare (118)
 Crops (123)  Tourism (74) Publishing (57)
 Forestry and Logging (34)  Transportation and Infrastructure (54)
 Livestock, Hunting and Fishing (150)  Resources and Energy (56)
 Foreign Affairs and Trade (11)
Arts and Culture (431)  Human / Social Services (45) Real Estate / Property (187)
 Event Production and Promotion (26)  Employment and Workplace Relations  Property Management (83)
 Libraries and Archives (356) (95)  Real Estate Development (70)
 Museums (49)  Law and Justice (112)  Real Estate Transactions (34)
 Law Enforcement/Police (34)
Construction & Capital Works (113)  Communications, Multimedia and Resources (458)
 Civil Engineering (37) Information (18)  Coal and Minerals Mining (336)
 Construction of Buildings (76)  Sports (16)  Oil and Gas (66)
 Sustainability / Green Energy (56)
Customs (246) Healthcare (1576)
 Border Protection and Enforcement (63)  Healthcare Support Services (38) Retail (160)
 Compliance and Risk Management (34)  Veterinary Medicine (7)
 Customs Administration (32)  Medical Practice (299) Sport Management (138)
 Immigration and Travel (35)  Hospitals (1116)  Coaching / Training (27)
 Revenue Collection (20)  Medical Laboratory (30)  Sport Club Management (65)
 Trade Facilitation (62)  Emergency Response / Ambulance  Sport Event Organization (46)
Services (34)
Education & Training (745)  Preventive Healthcare (35) Sports (147)
 Academic Education (258)  Pharmaceuticals (17)  American Football (12)
 Colleges and Universities (177)  Badminton (10)
 Primary and Secondary Schools / K-12 (254) Hospitality & Tourism (351)  Baseball (29)
 Training and Other Education (46)  Food and Beverage Service (170)  Basketball (18)
 Hotel / Accommodation (140)  Cricket (10)
Financial Institutions (571)  Travel Agency (41)  Football / Soccer (26)
 Banking and Credit (169)  Rugby (10)
 Insurance (79) Infrastructure Operations (735)  Tennis (32)
 Investments (91)  Airports (344)
 Mortgages (162)  Ports (291) Telecommunications / Call Center (151)
 Pension Funds (70)  Railways (26)  Call Center (81)
 Roads (74)  FTTX (27)
Government - Local (891)  Telecommunications (43)
 General Local Administration (85) Manufacturing (97)
 Public Services (174) Transportation (1672)
 Economic & Business Affairs (93) Media (153)  Airlines (515)
 Public Safety (125)  Broadcasting (TV and Radio) (63)  Land Transport (Road & Rail) (500)
 Social Services (143)  Film and Music (45)  Local Public Transport (372)
 Budget and Finance (38)  Social Media (45)  Marine Transport / Shipping (246)
 Culture, Recreation and Entertainment (41)  Taxi (39)
 Community - Quality of Life (34) Non-profit / Non-governmental (566)
 Environment (142) Utilities (994)
 Sports (16) Postal and Courier Services (295)  Electricity (254)
 Natural Gas (462)
Government - State / Federal (1008) Professional Services (495)  Water and Sewage (278)
 Military, Security and Defense (24)  Engineering (42)
 General State Administration (113)  Recruitment / Employment Activities (55)
 Agriculture, Fisheries and Forestry (49)  Legal Practice (282)
 Education (123)  Business Consulting (84)
 Finance / Treasury (66)  Accounting Services (32)

SEC III KPIS…NATURALLY
Measurement as a human activity is not new. It emerged “New philosophy of performance, driven
in early history as a mean for discovery and sense making. by self-assessment and purposeful
Archaeologists consider the first measurement tool used
achievement as a mean to happiness.”
in human history to be the Lebombo bone, a baboon
fibula containing 29 cut notches. Dated 35,000 BC, this
tally stick was discovered in the Lebombo Mountains in
Swaziland. Is there a better way?
Evaluation, as a form of measurement was used as early as Yes, but it is not simple. It requires a change at multiple
the 3rd century AD, when emperors of the Wei Dynasty levels, from the underlying philosophy of performance,
rated the performance of the official family members. The to mentalities and processes. This is not easy. Over
biased nature of individual performance evaluation was time, the use of Key Performance Indicators (KPIs)
noticed by Chinese philosopher Sin Yu, who reportedly became synonym to performance measurement and
criticized a rater employed by the Wei Dynasty with management. KPIs are the link between the old and the
the following words: “The Imperial Rater of Nine Grade new in performance management. Their use, however, is
seldom rates men according to their merits, but always much richer and rewarding in an environment based on
according to his likes and dislikes”. organic performance architecture principles:
A major milestone in making the connection between Organizations are echo-systems in their own right.
measuring as a human activity and performance was in They vary in terms of maturity and the environment in
1494, when Luca Pacioli published in Venice ‘Summa de which they operate. As such, their use of performance
arithmetica, geometrica, proportioni et proportionalita’ management systems should reflect their own
(‘Everything on arithmetic, geometry, proportions and “personality”. You can try to build an igloo in Sahara, but
proportionality’). It detailed a practice the Venetian sailors it won’t be sustainable. The performance architecture of
had in place to evaluate the performance of their sailing each organization needs to be unique and to reflect its
expeditions, which became the basis of the double-entry internal and external environment.
accounting system. In time, the subjective nature of
individual performance evaluations and the dominance of Systems thinking provides a much richer context for
financial indicators for evaluating enterprise performance understanding and improving performance. Command-
became stepstones for performance management in and-control worked in time for the army, for increasing
human activities. The industrial revolution added to this productivity of unskilled workers during the industrial
combination the “organization as a machine” metaphor revolution and for managing large organizations (such
that played a major role in driving improvements as the public service). Today, knowledge workers form
in efficiencies and effectiveness. The result was an the majority of the workforce in developed economies,
organizational performance management model based operate in a much more interconnected environment
on mechanistic, command-and-control thinking, driven and have to make decisions at an accelerated pace.
by subjective individual performance assessments and Understanding the systems in which we operate,
financial indicators and crowned by pay for- performance analyzing flow and learning based on data become ever
arrangements. more important today and complement the traditional
simplistic managerial approach of executing orders from
Did it work? above.
To a certain extent, yes. Many organizations flourished KPIs should be used primarily for learning. The role
and matured based on this model. of KPIs should be the one of providing the required
information to assist in navigating towards the desired
Does it have flaws? results. The same principle is used by ants, who leave
Many. And while historical circumstances attenuated pheromone trails to assist each other in navigating
them in time, today’s environment amplifies and exposes towards the food source. Similarly, the nerve impulses
them at an accelerated rate. travel through the different points of the nervous system,
transmitting information. KPIs results should travel not be restricted to paper reports and computer screens
through the organization, facilitating communication, anymore.
providing a base for analysis / synthesis and ultimately
decision making across all levels of the organization. New philosophy of performance, driven by self-
assessment and purposeful achievement as a mean
Data accuracy in human administration is an elusive to happiness. While happiness means many things to
desideratum. Neils Bohr once said: “Accuracy and clarity of many, a common expression of this feeling is the result
statement are mutually exclusive”. Accuracy is a challenge of the purposeful achievement of a desiderate. Achieving
in exact sciences and even more in human administration. something we want, while shared with others, is about us
Striving to obtain any KPI data is a challenge in itself for and reverberates strongly in our inner self. Transposing
many organizations and data accuracy is an even bigger this powerful catalyst of performance in both our personal
ask. The use of KPIs should acknowledge this aspect and and organizational life is facilitated by a new paradigm:
be oriented towards making the most out of existent data, Happiness is driven by achievement. Achievement
oftentimes by using variance intervals. This approach is is an expression of performance. If we want to be in
used by the human body. If the temperature drops under control of our happiness, we should be in control of our
a safe limit, we shiver. If the temperature increases, we performance. Self-assessment of performance results is
sweat. Both are performance improvement initiatives of not easy. However, if more emphasis is placed on building
the body, aimed to regulate its temperature back to safe this capability in each employee, organizations can
limits. The KPI here is the temperature. While it is not a benefit by creating a rewarding environment conducive
constant, its trend is good when within certain safe limits. to happiness. In this environment, managers can focus on
understanding and improving the working system, while
The use of KPIs for rewards and punishment should employees can focus on self-assessment of the results’
be limited and driven by self-assessment. Purposeful achievement, learning and communicating. Purposeful
oriented behavior is a characteristic of living organisms. achievement of results in a well-structured working
For humans and many other species, this behavior is system would bring both individuals and organization
amplified by rewards and punishment. Along with this much closer to happiness and fulfilment compared to the
amplification, risks are amplified, too. Gaming of results, payment of bonuses in the current command-and-control
lack of cooperation, decreased morale and work accidents driven dominant paradigm.
are some of the undesired consequences. On the other
hand, the majority of nerve impulses in the human body
transmit general information. Only in particular situations
“KPIs are here to stay. The question we
pleasure or pain signals. Similarly, the use of KPIs for
rewards and punishment should be the exception to the
have to answer is how do we want to use
rule, rather than the norm. them: mechanistically or naturally?”
Embedding KPIs in organizations through visualization

and communication of KPIs results is the key to
maximizing their value added. Variations in the KPIs used
by the human body are felt by our senses as their impact
is sensory rich. Similarly, KPIs used in an organizational
context should be embedded in everyday use and be
Aurel Brudan
a part of the working experience. The most important Chief Executive Officer
aspect of communicating KPI results is their visual The KPI Institute
representation. This is key, both in terms of optimizing
the layout of the data representation and the presence
of visual displays in the working environment. The range
of media is diverse today: posters, whiteboards, banners,
LED and LCD monitors should be combined to bring
results to life across the organization. KPI results should

ABOUT KEY PERFORMANCE INDICATORS (KPIS)
In many domains of human activity, the usage of tools is In practice, the terminology used to express them is
essential for achieving the desired results. Measurement diverse. The most common expressions are: performance
and evaluation make no exception, being equipped with indicators, metrics, key performance indicators or key
both conceptual and physical tools. Of the first category, result areas. Both academic and practitioner literature
at the core of any performance measurement and use these terms interchangeably, oftentimes even within
management system are the Key Performance Indicators the same organization. This can cause confusion among
(KPIs) used. They provide the important data that is stakeholders, and it can also affect the way these tools
monitored and reported within an organization, by using are used in practice. Establishing a common terminology
scorecards or dashboards. at organizational level brings everyone on the same
page and facilitates a consistent approach to KPIs. To
bring more clarity in working with KPIs, The KPI Institute
recommends the following approach:
METRICS
 FOR MEASUREMENT
KEY PERFORMANCE INDICATORS KEY RISK INDICATORS

 FOR PERFORMANCE ASSESSMENT
 FOR RISK ASSESSMENT
ANALYTICS
 FOR DECISION MAKING
 METRIC
It has its roots in the word “metron”, used in ancient Greece to reflect measurement. Metrics refer to something
we can measure, a value, or a quantity. Examples of metrics are: # Air temperature, # Air quality, # Water depth,
# Height, # Weight or # Employees. When metrics reflect the achievement of a desired state, they become Key
Performance Indicators. Oftentimes, metrics represent the subordinated measures used for calculating a KPI.
 KEY PERFORMANCE INDICATOR (KPI)

A measurable expression for the achievement of a desired level of results, in an area relevant to the evaluated
entity’s activity. KPIs make objectives quantifiable, providing visibility into the performance of individuals, teams,
departments and organizations and enabling decision makers to take action in achieving the desired outcomes.
Typically, KPIs are monitored and communicated through dashboards, scorecards and other forms of performance
reports.
 KEY RISK INDICATOR (KRI)
A metric that provides an early warning regarding an increased risk exposure in a certain area of operations. For
example, a high level of % Clients experiencing financial difficulties can indicate the risk of not being able to
collect all debts and will negatively impact $ Write-off accounts. By monitoring KRIs, managers are able to take
a proactive approach in risk management by preventing incidents or diminishing their impact, when they occur.
 ANALYTICS
Consists in a data analysis of KPI results, meant to determine trends and data patterns in order to provide
valuable information for better decision making. Analytics offer a better understanding of how the business
works, and the interdependencies between KPIs. Predictive analytics can provide valuable insights in regards to
our customers’ purchasing habits, the best time to launch a product, or how internal processes can be optimized.
Main reasons for KPI use and performance improvement in the organization:
Engagement through results ownership 3.44
Management behavior betterment 3.44
Results improvement 3.43
Effective communication 3.42
Employee involvement 3.40
Knowledge creation 3.34
Strategic clarity 3.33
Organizational focus 3.26
C-suite learning and acknowledgement 3.24
The annual research conducted by the KPI Institute on improvement in terms of management behavior and
the “State of Performance Improvement and KPIs” reveals improvement in quantifiable results.
the reasons KPIs are used in organizations worldwide
while emphasizing the main trends in KPI use over time. Having been confirmed as one of the main reasons
For the last years the survey reveals a shift in the 3 main for which organizations use KPIs and performance
arguments used by professionals to promote and justify management systems in the organization, effective
the use of KPIs: from clarity, improvement and focus to communication seems to be another important driver
engagement, improvement and communication. for performance improvement. Interesting enough, focus
comes as second last in the survey responses. Whereas
A top issue and most controversial item on the agenda KPIs used to be considered an important tool to drive
of both public and private organizations nowadays, clarity and focus, it seems like KPIs are now seen as more
engagement is stated as one of the main reason for KPI of an edge in prompting engagement and communication
use and performance improvement. Two other reasons within the organization.
participants in the survey considered well important are,

ADVICE ON KPI SELECTION
Choosing the right KPIs represents the basis for a successful performance management architecture. Given its paramount
importance for the performance management system, the KPI selection process is one of the most common challenges
professionals are facing in working with KPIs. Confronted with questions like “How can we measure the achievement of
this strategic objective?”, “How does a KPI look like?”, “How many KPIs should we have?”, “Where can we find examples
of KPIs?” or “How can I ensure a set of KPIs that is relevant for my business?”, professionals can easily get lured into a
KPI selection process were efforts are pointlessly wasted and poor results are produced.
Before embarking on the KPI selection journey, The KPI Institute recommends to have in mind the following guidelines:
 Internal research  External research

Start your KPI selection process by reviewing the existing Use external lists of KPI examples and other secondary
internal reports or other supporting documents, as well documentation to inform and support the KPI selection.
as, by using the documentation at hand. Previous business Reviewing KPI examples used by competitors or
or strategy plans, annual reports, performance reports other organizations in the industry or functional area,
and other documentation that relates to performance provides context to the practices of others and improves
management, measurement and benchmarking will be understanding of the way KPIs look like and the means
very helpful in understanding the current level of using used in working with them. Avoid selecting KPIs based on
metrics or KPIs in the organization, and sets a baseline to the argument that they are widely used in your business,
initiate discussion. A KPI selection process does not have and filter that list of popular examples through your
to put aside the metrics that are already used. It does not organizational strategy: do they make sense for what you
have to focus exclusively on bringing new examples, but want to achieve?
to combine the elements that proved effective in the past
with new perspectives.
KPI SELECTION
INPUT
ANNUAL COMPETITORS
 REPORTS  REPORTS
OPERATIONS ONLINE
 REPORTS  CATALOGUES
INTERNAL EXTERNAL
FRONT-LINE
 RESEARCH RESEARCH

 EMPLOYEES
 EXPERTS
INPUTS
BOARD AND
SUPPLIERS AND
 MANAGERS  CUSTOMERS
INPUTS
 Value drivers and business objectives manage the business, such as dashboards or scorecards.
By presenting the objectives, KPIs and performance results
For a relevant KPI selection it is essential to start the associated into some visual dynamic tool managers can
process by identifying what drives most value for the easily grasp the pulse of the business and take actions.
business and where resources are most worth invested.
The business strategy should be built around value drivers.  Context
KPIs serve as tools to monitor strategy implementation.
The realities of organizational activity and business
They are just one component of the value creation
environments should be embedded in your KPIs.
chain and of the performance management system. In
Each organization is different, operating in different
this context, KPIs should be directly liked to business
environment, with different guiding principles. Hence the
objectives. They create the connection between strategic
KPIs used need to reflect the specifics of each organization
objectives and actions (initiatives), and when KPI targets
first and industry/functional area characteristics second.
are not achieved, decisions must be taken to improve
results.  No measuring for the sake of
measurement
 KPI selection workshop
Some aspects may not be worth measuring or monitoring
This is the preferred format to deploy an effective selection
because they are not important, while others may be
process because it provides the adequate environment to
relevant for the business, but collecting data can be too
analyze all sources of information, as well as, brings key
costly. In both situations, it makes no sense to waste
stakeholders to the same table. It is important to involve
resources on gathering data that has no economic
KPI owners or even data custodians in the workshop, in
justification.
order to inspire stronger commitment towards the new
KPI framework. We can also have external stakeholders,  Regular review
namely, major clients, business partners, suppliers
contributing to the KPI selection. In this way, we can Check the KPI relevance regularly. If new KPIs are required,
ensure that all relevant inputs are considered. Information they can be established at any time. An essential aspect
coming from the external business environment can be of double loop learning is connected to using KPIs. It is
integrated into the workshop with no physical presence not only about achieving targets and objectives, but also
required from stakeholders. Inputs can be collected about ensuring the objectives and targets were the right
through an interview / discussion. ones to be set in the first place and the KPIs used to track
their achievement were the appropriate ones.
During this workshop, participants should be engaged
into applying different KPI selection techniques, such  An active KPI is better than an inactive
as, the value flow analysis, KPI balancing and clustering, KPI
in order to generate insights into the multiple facets of
If after more performance measurement cycles certain
measuring an objective or process. This event should
KPIs keep on being inactive due to various reasons:
also be explored as an opportunity to promote the use
infrastructure, technology or competence, it is better to
of KPIs within the entity, to consolidate a performance
eliminate of replace them. Instead of waiting to build the
management team and to educate stakeholders in
adequate system to measure # Customer satisfaction
managing performance.
index, you can start with a simpler KPI to monitor clients’
 Scorecards and Dashboards satisfaction like # Complaints received.
Consolidate the outputs of the KPI selection workshop

into hands-on tools that can be used on a daily basis to

KPI DOCUMENTATION GUIDELINES
The KPI documentation process is a comprehensive endeavor involving research, outline and analysis. A standardized
documentation form aggregates all relevant information in regards to measuring a KPI and sets the basis for a rigorous
and reliable data collection and reporting process.
Why use a KPI documentation form?
 STRUCTURES KNOWLEDGE  EDUCATES STAKEHOLDERS
As an instrument, the KPI documentation form is The existence of KPI documentation forms within
very effective in terms of knowledge management. an entity creates an internal library of KPIs, that
It captures the know-how, enables constant employees can access to learn how to collect data
updating, transfer and retrieval of information. or to better understand performance results.
 COMMUNICATES EFFICIENTLY  ACTIVATES DATA COLLECTION
Through a standardized template, communication Even if the content of a KPI documentation form
becomes more reliable and effective. It provides can vary from one entity to another, there are
the necessary guidance to measure a KPI and some critical pieces of information which are
ensures consistency from one data collection essential in the process of activating KPIs and
period to another. can include: KPI definition, calculation formula
and targets.
The annual research conducted by the KPI Institute on the “State of Performance Improvement and KPIs” reveals mostly
moderate familiarity with KPI Documentation Forms in organizations worldwide. Another 34% of respondents seem to
be less familiar with standardized KPI documentation forms, as they stated that they only scarcely use this tool, if at all,
to get full comprehension of their KPIs. The regular, full use of standardized KPI documentation forms is common for the
least part of the professionals partaking in the survey – 29%.
Interesting enough, organizations seem to be least mature in areas such as KPI documentation. Learning from performance
results is most certainly obstructed due to the fact that performance results are analyzed in an isolated manner, without
minding context. Little maturity in regard to KPI documentation is mostly due to scant familiarity with standardized KPI
documentation forms and seldom revision and update of the KPI documentation process.
Standardized use of KPI Documentation Forms in organizations around the world:
Moderate use of standardized KPI documentation forms 37%
High or extended use of standardized KPI documentation forms 29%
Minimal or no use of standardized KPI documentation forms 34%
Another study conducted by The KPI Institute in 2015, focused on analyzing over 50 examples of KPI documentation
forms encountered in practice, has identified more than 50 fields used in various configurations of this tool. The most
popular fields revealed by the study are listed in the graphic below:
Most popular fields
Name 55 The KPI Institute’s research outlines three prevalent

clusters of information commonly used in the process
Definition 41 of KPI measurement: KPI Definition, Targets and Data
profile.
Calculation formula 34
Data source (report / KPI Definition includes fields like KPI ID record, Name,
system) 27
Definition, Purpose and Variations.
Purpose 26
Threshold example 19 KPI Targets either includes specific targets, or thresholds

outlining above target, within range and below target
Related objective 17 intervals. The Targets section can also contain additional
information related to the target setting process.
KPI record 17
Overall notes 16 Data Profile outlines the data sources, accountability for
data, KPI limitations and reporting frequency.
Unit type 16
Most popular clusters of fields
Definition and KPI documentation forms ensure a standardized

variations 3
approach in working with KPIs and contribute to building
Targets 2 an organizational KPI library that is a valuable source of
knowledge in performance management. The value added
Data profile 2
by using KPI documentation forms relates to clarifying
the means and purpose for KPI measurement. Moreover,
it ensures accountability by setting data owners and
custodians for each KPI.

TARGET SETTING: FROM THEORY TO PRACTICE
When it comes to the Performance Management System target setting process that is transparent and inclusive of
itself and the use of KPIs in the organization, participants its main stakeholders: Data custodians and KPI Owners.
to our yearly State of Performance Improvement and Key The frequency of adjusting KPI targets is mainly annual,
Performance Indicators nominated target setting as the and for the majority of responses, 70%, targets are
most mature performance management process. 80% of believed to create a moderately to highly motivating
the respondents to the survey claimed their targets are working environment for employees.
moderately to highly realistic, which relates to a formal
The targets associated to KPIs are realistic:
High to very high extent 39%
Moderate extent 41%
Very small to small extent 20%
Targets are established through consultations with staff members who are responsible to reach the
targets and who are familiar with the data collection process:
Moderate extent 35%
The targets established seem to create a motivating working environment for employees:
Moderate extent 42%
The implications of inadequate target-setting are result in a dangerous combination of human greed and
immeasurable. Easy targets cannot be incentivizing mechanistic behavior. Inappropriate targets can ultimately
enough to motivate performance. Stretch targets, harm customers and generate risks. In order to avoid
otherwise known as the targets pushing the boundaries tunnel behavior, lack of ethics, or risky decisions, it is
on what can realistically be achieved, can reach such a important to conduct an efficient target setting process:
high level of demotivation that they negatively impact
employee retention. Targets for control in many instances
 Target setting  Setting targets

Based on the company’s historical data, on benchmarking For both individual and team KPIs significantly motivates
studies, and on market analysis can provide valuable staff members to act cohesively for the delivery of results.
information and reference points in determining the
appropriate level of targets.  Transparency
 Decomposing Works in favor of target acceptance. As long as employees

have a clear understanding of what’s expected of them,
Long-term targets into short-term targets ensures a they are more likely to perform well.
step by step approach that guarantees a sustainable
development path for the organization.  Reward and recognition
 Using thresholds Driven target-setting is the norm. Reward and recognition

platforms are major contributors to engagement
Instead of targets provides a more detailed image in outcomes.
regards to performance. By replacing inflexible digits with
intervals, thresholds can relieve the pressures of unilateral  Celebrate and reward
results. Even small achievements. Some targets, especially
 Cascading targets stretch targets, may be very hard to achieve or might take
longer. To keep employees motivated, it is important to
Gives employees accountability for growth both within, acknowledge and reward even smaller accomplishments.
and together with the organization. Organizational
alignment is paramount to the achievement of ambitious  Setting targets
company goals. Is not a one-time event, it is a permanent process that
 Targets should be involves periodical reviews and target recalibration.
Adjustments should be made as often as necessary, in
Ambitious enough as to trigger motivation, as well as, order to ensure target relevance.
attainable, otherwise employees can get frustrated with
their repeated underachievement.
Thinking of profitability when setting targets does not necessarily lead to the desired outcomes. If it comes to the point
that stretch targets are necessary, they should be about human excellence and not solely about financial success.

DATA GATHERING DIMENSIONS
Gathering data for KPI results is one of the most common challenges professionals face when measuring performance.
An effective data gathering process should not only provide timely performance data, but also high quality data.
Some of the main data gathering issues encountered by organizations are related to five main themes, namely:
 ACCURACY  CONSISTENCY
Indicates the extent to which data reflects on the Refers to delivering consistent data across
realities measured. Inaccuracy can be reflected by different reports. It implies a synchronization of
incorrect values, whether numbers or descriptive data across the organization.
data (gender, location, preferences etc.), as well
 UNIQUENESS
as, other information that has not been updated.
Points out that there should be no data
 COMPLETENESS
duplicates reported. Each data record should be
Refers to whether all available data is present. unique, otherwise the risk of accessing outdated
Unavailable data does fall short of completeness. information increases.
 TIMELINESS
Indicates whether the data was submitted in due
time, as per the data gathering deadline
 COMPLETENESS
 ACCURACY  TIMELINESS

DATA
QUALITY
 UNIQUENESS  CONSISTENCY
As the decision making process is significantly impacted by the performance data furnished in monthly reports, providing
unreliable information might severely damage the organization, by influencing key factors towards making the wrong
decisions. In order for the data gathering process to run smoothly, there are a few meaningful components to consider:
 Data custodians  Data gathering process map
Identify those employees who will become responsible for A flow chart will provide data custodians with a more
gathering the data. The profile of a data custodian should transparent data collection process, as well as, with clear
include hands-on measurement practice, KPI reporting deadlines for data availability.
abilities, technological skills (business intelligence tools
or Microsoft Excel), insights into the processes assessed,  KPI Documentation Form
access to data, as well as, an ethical commitment to This document will ensure consistency in the
preserving the integrity of data. Some companies may measurement of individual KPIs, by presenting details
choose to outsource data analysis expertise, while other such as KPI definitions, calculation formulas, data sources
organizations might choose to name data custodians and measurement limitations. A well-documented KPI
among existing employees. library will significantly impact the quality of the KPI
 Expertise measurement process.
For the majority of companies, hiring a specialist, such  Internal audit

as a data analyst, is not an option to be considered. As Periodical audits of the data gathering process identify
a consequence, these companies have to rely on the critical issues interfering with the quality of the
resources they already have. In this context, it is highly data produced. Addressing these issues leads to the
important for designated employees to be trained as improvement of the data gathering process.
data custodians. Developing this internal capability
can be done through several initiatives, varying from  Infrastructure
formal training events to internal learning and sharing
gatherings. A Data Custodian Community of Practice can Use technology in order to ensure an efficient data
help address different challenges by identifying the right gathering. Having automated processes improves both
solutions to these challenges. Participants can exchange the accuracy of data and its availability in due time.
experiences and come up with initiatives to improve the
current data gathering process.
The guiding principles hereby presented can aid the data gathering process by streamlining its main components and
providing reliable data for decision making.
PROCESSING
DATA

ENHANCING PERFORMANCE DATA THROUGH
VISUALIZATION
An analytic, data-driven organization will almost certainly use data visualization to enhance its performance reporting.
However, there is a certain complexity to data that requires its visualization to communicate simplicity and accessibility.
An art in itself, data visualization is not just about converting raw data into visuals, but also about structure and narrative.
Data visualization adds value to the performance reporting process when it manages to communicate the data in an
elegant, comprehensive manner. Proficient data visualization improves the performance reporting process by optimizing
the time required for data analysis and helping the user gain valuable insight into the decision-making process. When
inadequately done, it creates confusion and ambiguity rather than provide desired answers.
“Proficient data visualization improves the performance reporting process by optimizing

the time required for data analysis and helping the user gain valuable insight into the
decision-making process.”
 Tailor the visualization to the purpose

of the data
# Vehicles sold

The visuals that best convey performance data are the
395
ones that enable the stakeholders to easily gather the
information that they need. This is why designing visuals
with the purpose of the data in mind, is vital to any 261
internal and external analysis performed thereon.
171
 Be selective about the graphical
representation of data
The business intelligence environment of today supplies
users with an unprecedented number of data visualization
tools and techniques. Given the wide variety of charts,
scatter plots, box plots and histograms, it is oftentimes
strenuous to be selective about data visualization
elements and their layout. However, an adequate
representation of data will desist visual overload. At the
# Vehicles sold

same time, it will avoid a decorative visual design that 395
suppressed the true meaning of the data.
 Generate an effective visual design 261
With performance reporting, it is essential that visuals

171
complement the data gathered and not obscure it. Data
visualization is meant to best uncover and reflect on the
relationship between different data sets.
2005 2010 2015
Bar charts are a simple and discrete way to convey
ranking and comparison. Bar charts are the ideal tool for
the visual representation of performance data, especially
% Net Promoter score

because they are great in comparing values. M1 74%
M2 76%
Line charts are optimal for revealing trends over time.
With performance data, line charts provide a historical M3 72%
view on the most relevant key performance indicators,
by consolidating the reporting frequency (X axis) with the M4 69%
KPI results (Y axis). M5 51%
Dashboards are the preferred tools for performance data M6 49%
visualization. They make the best use of data to provide
an integrated view on an organization’s performance.
The flexibility in working with Dashboards allows for
the use of various graphic representations to reflect on
performance. The use of both bar charts and line charts

amplifies the meaning of the data by disclosing its multiple 74% 76%
patterns. While bar charts are better at establishing and 72%
69%
comparing values for different KPIs, line charts can be
extremely articulate in revealing KPI trends.
 Overcome the most common mistakes 51%

49%
in data visualization
One of the easiest ways to misrepresent data in a visual
rendition is by distorting the y-axis. In most cases, the M1 M2 M3 M4 M5 M6
y-axis should have a range starting from 0 to a maximum
that encompasses the range of the data. Although
appealing, the use of 3D graphs can sometimes lead to
the misinterpretation of data, especially if data labels
do not specify exact values. 3D bar charts can have a
negative impact on data readings. The color pallet used

to highlight important data, should subtly match the
semantic consistency of the content. High contrasts
and chaotic color encodings can be both tiresome and 80%
unattractive.
60%
 Perfect your data visualization
techniques 40%
Providing the user with a meaningful data visualization

20%
helps spread the message behind the vast data in the
background across and assist the viewer in reaching a
0%
quicker, strategic and, most importantly, correct decision.
The interactivity of dashboards enables users to access M1 M2 M3 M4 M5 M6
different data sets with ease, supporting timely decision
making.

DATA ANALYSIS
The digitalization of global information systems, has spawned large volumes of data that have gradually become more
difficult to manage. Having understood the characteristics of big data, the corporate world has been seen trying to
contain it and build on the opportunities of its inductive abilities. In practice, many organizations are facing challenges
like:
 Too much data, losing sight of what is important;

 Lack of expertise in processing the data;
 Lack of insight into the true meaning of data;
 Data gaming in presenting the data;
 Resilient focus on past performance.
 Too much data  Lack of expertise in processing the

data
There is this common expression used to reflect on the
overwhelming effect of big data. “Drowning in data” is Working with numbers is not a job for everyone and, like
a phrase that many of today’s managers have become with any other practice domain, organizations need subject
acquainted with. One of the challenges in handling matter experts such as data analysts, or statisticians, to
large volumes of data is related to the right database provide quality data. Key quality dimensions of data are
management systems and business intelligence tools related to accuracy, completeness, timeliness, consistency
needed to compute big data. There are few companies and uniqueness. Specialists who can provide quality data
that own the right infrastructure to deal with big data may be difficult to find and expensive to hire, but they
issues, and the ones that do, should not forget about a can turn into a valuable investment for the organization.
well-articulated strategy to go with their technologies.
Just because one has the infrastructure to measure  Insufficient insight into the true
everything, it does not mean one should actually do so. meaning of data
A consistent strategy will assist management with making One can agree that numbers have the ability to reflect
use of only what’s essential and making use of the data on the objective reality of our business, but the way one
that really makes a difference. chooses to interpret and use those figures can widely
$ Sales
1000 567 678 896 3223 334 445 444 334 2345 2345 2356
January February March April May June July August September October November December
vary. In some cases, managers may not have the ability or An effective data management and analysis system can be
skill to ask the right questions and verify what lies beyond set up, despite all challenges but it needs to be connected
the numbers, in order to get a true understanding of to the organization’s value drivers, to the organization’s
what is happening. It is a dangerous trap not to question strategy. To avoid drowning in data, the strategy should
the underlying assumptions based on which data was be able to define what is important for the organization
generated. Just because data was produced by the latest through clearly articulated goals and objectives. To ensure
analytics model does not mean it is unquestionable. that objectives are reached, the company should identify
several KPIs for each objective. The latter refer to tracking
 Data gaming key processes within the organization that are conducive
While taking advantage of one’s lack of expertise, it seems to the successful achievement of the objectives set.
very easy to also manipulate data. One has no interest Scorecards and dashboards help validate the key figures
in presenting data that is not working in their interest, decisions are based upon, and they make it easier to
therefore it is important to ensure the reporting process verify the reliability of the data, as well as, to ensure a
is structured as such, that it enables the mitigation data proper KPI measurement and reporting process.
gaming risks. Reported data may be engineered to serve
one’s interests, but the person in charge with decision It is barely enough to design and implement a
making should have the ability to see beyond a beguiling performance management system. In the era of Big Data,
presentation. an organization must also develop the capability to work
with data. Key stakeholders need to be trained into how
 Resilient focus on past performance to collect data, how to report on data, how to analyze
Reporting is retrospective and many performance review and take decisions based on the information provided in
meetings have become an opportunity for managers performance reports.
to present the data they need to justify their actions. By blending in these components: a performance
There should be more interest towards moving forward, management system, the right technological infrastructure
towards planning next steps and identifying key areas of and an organizational capability that specializes in working
action that will ensure the progress of the organization. with data, one can see their organization overcome the
disillusion of the data mirage, while it proceeds to finding
and building on the true value of data.
# Customers
200 50 123 45 250 200 56 45 55 124 134 167
January February March April May June July August September October November December

KPI REPORTING
Reporting is an important stage in the performance management process, although managers can sometimes fall into the
trap of considering it as the end of the performance cycle. However, just reporting on performance data will not ensure
the improvement of results. Improvement is possible when decisions are made based on the insights provided by data.
Common issues in reporting are the overload of information, which makes it hard to focus on what is important, the
unavailability of information in due time or the inaccuracy of data.
By following these 10 pieces of advice, you can solve the above-mentioned problems, ensure a better reporting and,
consequently, improve the decision making process.
 Data timeliness  Report availability

Ensure data timeliness by clarifying the responsibilities of Send the performance report to all stakeholders at least
data custodians and the data gathering process. Sending 3 days in advance of the performance review meeting, in
reminders also helps in receiving data on time. order to ensure data is reviewed before the discussions.
 Data accuracy  Meeting agenda

Verify for data accuracy by requiring for raw data as well Inform all participants about the performance review
and analyzing it before compiling the report. Frequent meeting agenda and make sure you stay on topic, in
data audits ensure better accuracy. order to ensure the important issues are solved in due
time. Should you be interested in conducting efficient
 Side comments and effective performance review meetings, make sure to
Make sure performance results are accompanied by include topics such as:
comments. Data custodians should also provide the
 Presentation of results;
context in which either high or low levels of performance
occurred.  Discussions on the KPIs that are far from
reaching targets;
 Simple display
 Analysis of the possible causes of
Display data in tables and graphs by maintaining a simple underperformance;
and appealing visual design of the report.
 Review of the portfolio of initiatives;
 Decisions upon the next steps.
REPORTING
Report compilation process

PROCESS
DATA

REVIEW DATA
PROCESSED

CHECK DATA
QUALITY
 DATA
ANALYSIS
COMMUNICATE
REPORT

 GENERATE
REPORT
 Discuss results  Follow-up

Discuss the KPIs on red should with priority and identify Send a follow-up email with the meeting minutes and
the root cause of the problems. all initiatives established, along with their responsible
persons and deadlines.
 Find solutions
When it comes to KPI reporting, improving this process
Avoid finding responsible persons for poor performance.
represents the base of a better, more informed and
Instead, focus on finding solutions and assigning
efficient decision making process!
accountability to make sure the initiatives agreed upon
will be implemented.
 Stay on track
Keep it short, by assigning a meeting coordinator to keep
discussions on the right track! A performance review
meeting should not last for more than 2 hours.

SEC IV ACCOUNTING FUNCTIONAL AREA
The earliest known writings were discovered on clay By clarifying the role and objectives of the Accounting
tablets in Egypt and Mesopotamia, dating back to 3000 function within the organization, it becomes easier to
B.C. When they were translated, they proved to be records identify its overall contribution to the company.
of tax accounting, as humans needed some way of keeping
track of their “possessions.” KPIs that measure the involvement of the Accounting
function in the accomplishment of strategic objectives,
However, it was only during the Renaissance period that keep managers focused on key processes and facilitate
modern accounting took the form we see today. The operational improvements. In this respect, good practice
innovative Italians of those times are widely acknowledged examples blend up timeliness KPIs (like # Time to process
as the forefathers of accounting. bills, # Days past-due invoices) with KPIs that measure
quality of work (as % Billing accuracy, # Invoices under
Driven by progress, accounting tools and techniques have query).
significantly evolved. Nowadays, professionals are not
only concerned with maintaining records of their assets, Despite being one of the core functions within the
but also with the added value accounting functions within organization, current trends show that accounting is
the organization can create. On the other hand, it is rather frequently outsourced. Outsourced accounting services
difficult with Accounting Departments, as with any other are common practice across various industries with both
support function, to measure the added value it brings to small and mid-sized companies. This is due to the multiple
the organization. benefits of outsourcing: increased expertise, reduced costs
and better data management infrastructures.
Divisions
Given the variety of activities that Accounting functions Planning and Reporting divisions relate to budgeting
serve in an organization, a different set of KPIs is identified financial results.
for each of these functions. The 6 functions hereby
presented cover the most prominent facets of Accounting
Transactions / Accounts Payable / Accounts Receivable
divisions:
capabilities enable the precise measurement of invoicing,
payments, and transactions that ultimately reflect on the
Accounting Systems capabilities concern themselves consolidation of all accounts.
with the functionality of the accounting infrastructure as
well as, the technological aspects of bookkeeping.
Accounting Professional Associations
Cash Management divisions deliver necessary insight
into the status of cash reserves relative to short-term
spending.  Chartered Institute of Management Accountants
 The Institute of Chartered Accountants in Australia

Control functions have the ability to ensure efficient
controlling operations and data consolidation.  CPA Australia
 American Accounting Association

Cost Analysis helps keep track of the company’s
expenses.  Association of Chartered Certified Accountants
TOP 25 COST ANALYS I S KPIS OF 2016-2018
NO. KPI NAME DIVISION
sK3321 $ Working capital per employee Cost Analysis
sK3334 % Cost of the finance function from revenue Cost Analysis
sK414 $ Cost of goods sold (COGS) Cost Analysis
sK6254 % Obsolescence costs from total inventory Cost Analysis
sK316 % Gross profit margin Cost Analysis
sK3159 % Operating costs Cost Analysis
sK5945 $ Payroll tax paid by the employer Cost Analysis
sK65 # Interest cover Cost Analysis
sK314 % Contribution margin ratio Cost Analysis
sK3053 % Overhead cost ratio Cost Analysis
sK14056 # Cost improvement plans Cost Analysis
sK3282 $ Fixed costs Cost Analysis
sK4732 $ Spent on equipment Cost Analysis
sK7059 $ Life cycle cost (LCC) Cost Analysis
sK3286 # Sales to general and administrative expenses Cost Analysis
sK192 $ Operating expenses Cost Analysis
sK3158 $ Cost accrual ratio Cost Analysis
sK3284 $ Indirect costs Cost Analysis
sK3088 $ Total acquisition cost (TAC) Cost Analysis
sK140 % Wages cost from sales Cost Analysis
sK3217 $ Fixed cost per employee Cost Analysis
sK3254 $ Overdue invoices Cost Analysis
sK3153 $ Discretionary costs Cost Analysis
sK2267 $ Costs per FTE employee Cost Analysis
sK3333 % Cost with employees from the operating revenue Cost Analysis

TEMPLATE DESCRIPTION: PAGE 1
KPI 4 % Budget variance 1
2 Functional Areas Accounting 5 Industries Any

3 Sub-categories Planning and Reporting Sub-categories Any
4 KPI Record sK479 Tags budget
Description Calculation
6 Definition Measures the deviation between the actual 9 Subordinate metrics A = $ Realized budget
costs and the planned (budgeted) costs B = $ Planned budget
for the same period. It can be applied at
organizational, team, project or individual level. 10 Calculation formula [(A-B)/B]*100
7 Variations 11 Trend is good when Within range

% Deviation of planned budget
% Project budget variance
% Variance of project budget Data Profile
8 Related KPIs % Budget allocated for new initiatives 15 Data capture period Spot
$ Project deviation from planned budget
$ Capital renewal budget 16 Standard reporting Monthly
% Budgeted time against actual time frequency
17 Data collection Financial records
Focus method
12 Purpose To indicate the financial discipline 18 Limitations Up-to-date expense tracking is
in executing budgets. Can be used required to ensure reporting is
as a tool to control costs. accurate. Usually, there is a delay
between the end of the month
13 BSC perspective Financial and when reports are available, to
enable the closing of accounts.
14 Objective measured Maintain financial discipline
Targets
19 Threshold examples 20 Target setting notes
   Targets should be set according to the internal procedures

and standards. In the case of projects with large budgets, a
Red: +/- >15% Yellow: +/- (10- Green: +/- <10% deviation of +/- (5-10%) can be a large amount of money,
15%) so a +/- (3-5%) target is more appropriate.
Analysis and Resources

21 Overall notes 23 References
Budget deviation analysis is a direct mean of control of 1. City of Atlanta (2012), General fund: Budget variance
the company’s financial discipline in terms of budget analysis, available at: http://www.atlantaga.gov/modules/
execution according to the terms initially agreed upon. showdocument.aspx?documentid=4863
22 Additional resources 2. Parker, K. and Aird, B. (2013), Budget management and
 http://www.gfoa.org/sites/default/files/GFR_
financial reporting, Old Dominion University, available at:
OCT_09_8.pdf
http://www.odu.edu/content/dam/odu/offices/finance-
office/docs/budget-management.pdf
1 Name: 13 BSC perspective:
Name of the KPI, a brief representation of its role. Standard Balanced Scorecard perspective where the KPI
2 fits best.
Functional Area:
Organizational capability or department that fulfils a
14 Objective measured:
specific business function. A sample objective that reflects on the organizational
purpose for the KPI being measured.
3 Sub-categories:
Sub-grouping of the industry or functional area.
15 Data capture period:
Period for which the results of the KPI have been
4 KPI Record:
measured.
Key performance Indicator (KPI) example unique
16 Standard reporting frequency:
identification number assigned automatically when
entered in the database. Frequency of reporting performance results for the KPI.
5 Industry: 17 Data collection method:
Aggregate of organizations operating in a particular field, The sources and techniques that support the data
often named after its principal product or service. gathering process.
6 Definition: 18 Limitations:
Succinct description of the KPI, clarifying its name in Other limitations (data or reporting system related) to be
business terms. considered during the use of the KPI.
7 Variation: 19 Threshold examples:
Other versions of the KPI name used in practice. Thresholds outlining the limits for positive and negative
results, as well as, the tolerance level.
8 Related KPIs:
20 Target setting notes:
List of other related KPIs in the database, either upstream
(influenced by this KPI), or downstream (with influence Additional information related to the target setting for
on this KPI). this KPI.
9 Subordinate metrics: 21 Overall notes:
Names of the metrics used in calculating the KPI (if General remarks about the use of this KPI.
applicable). 22 Additional resources:
10 Calculation formula: Other recommended online and offline resources for
Expresses the mathematical calculation of the KPI by use understanding and using this KPI.
of subordinate metrics. 23 References:
11 Trend is good when: List of resources reviewed as part of the documentation
Direction in which the results of the KPI need to progress, process.
for positive outcomes.
12 Purpose:
Explanation of the reason or business justification for
using the KPI.

TEMPLATE DESCRIPTION: PAGE 2
Scorecard Outlook 24
Perspective Financial
Strategic Objective Maintain financial discipline
Key SmartKPIs.com Standard Previous

Current
Performance reference reporting period Trend Target Results
results
Indicator number frequency results
% Budget variance sK479 M 4% 2%  2% 
Dashboard Outlook 25
KPI Results
% Budget variance % Budget variance
5% 5%
M1 5%
4% 4%
M2 5%
3%
M3 4%
2%
M4 3%
M5 4%
M6 2%
M1 M2 M3 M4 M5 M6
In Practice Recommendations 26
Planning is an essential part of financial management, as % Budget variance can be both positive and negative.
well as budget spending. Companies develop budgets The unfavorable variance that concerns organizations
as part of their financial strategy. However, progressing is indicated by positive results (such as +7%) because
towards desired company goals, while also maintaining they outline that expenses have exceeded the budget.
financial discipline is sometimes easier said than done. On the other hand, negative values (such as -7%) raise
Some recommendations on effectively managing budget questions about the accuracy of planning or reliability
spending include: of budget execution. There is an increasing interest for
budget deviations, as companies worldwide are more and
 Linking budget to strategy; more concerned with budget execution and accuracy of
 Efficient allocation of resources; forecast and planning.
 The use of KPIs to track financial progress;
 Connecting cost management to budget;
 Streamlining cash flow processes;
 Built-in flexibility for unexpected spending.
The second page of the documentation form was specifically developed to take the reader one step closer to an efficient
KPI monitoring and reporting process. The second page of the KPI documentation form is structured to befit the reporting
requirements of any KPI. It is comprised of 2 sections which are intended to provide guidance on KPI reporting, as well as,
enhance the empirical use of KPIs in day to day life. With extended editions of the Top 25 KPIs reports, the 3rd section provides
in practice recommendations to assist professionals with positioning KPIs in real life contexts.
24 Scorecard Outlook: 26 In Practice Recommendations*:

Positions the KPI within a Scorecard template that: For best KPI use, analysis and interpretation, the in-
practice recommendations assist the reader with
1. Illustrates the perspective of the Balanced Scorecard
positioning the KPI in the real-life context from whence
to which the KPIs should be assigned;
it was harvested.
2. Accommodates a sample objective that best summarizes
The second page of the KPI documentation form was
the purpose of reporting on the KPI;
especially designed by the KPI Institute to accommodate
3. Identifies the indicator as presented in the KPI snapshots of the core performance management tools,
Documentation form template; practitioners and professionals use in their day to day
4. Specifies the KPI Record number used to accurately operations.
identify the KPI in the system; The KPI results illustrated and the outlooks depicted
5. Mentions the standard reporting frequency as do not constitute reference for any performance
recommended for best use; management practice and are not meant to provide a
universal standard for reporting on KPIs.
6. Reveals previous period and current results as reported
on by the data custodian; The results and the outlooks presented can be regarded
as a possible approach to consider when reporting
7. Emphasizes the KPI trend as illustrated by the on KPIs. They can be further used as a platform by
comparison between previous and current results; organizations who want to proceed in their development
8. Mentions a sample KPI target as represented by the of personalized performance management tools.
desired results which are expected to be achieved; Such tools aid with monitoring and reporting on
9. Illustrates target achievement by comparing current performance, and it is essentials that they are properly
results with the target level. configured. The second page of the KPI documentation
form helps readers visualize the KPI as reported on by
the performance management tools already in use today.
25 Dashboard Outlook:
Recommended data visualization models that best help
identify current values, historical values and KPI trends. *Only with extended versions of the report

KPI 1 $ Working capital per employee
Functional Areas Accounting, Cost Analysis Industries Any

Sub-categories Cost Analysis Sub-categories Any
KPI Record sK3321 Tags operating costs
Definition Measures the amount of the company’s Subordinate metrics A = $ Working capital
working capital available in relation to its B = # Headcount
employees
Calculation formula A/B
Variations $ Net working capital per employee
Trend is good when Increasing
Related KPIs $ Shareholders funds per employee
Focus Data Profile
Purpose To indicate the adequacy of the Data capture period Spot

working capital available to the
Standard reporting Monthly
volume of staff.
frequency
BSC perspective Financial Data collection Financial records, Cash flow
Objective measured Increase working capital method statements
productivity Limitations Accurate reporting requires the use
of functional accounting systems.
Targets
Threshold examples Target setting notes
   Indicator levels vary from business to business and com-

parisons should only be made with similar companies in
Red: <10,000 Yellow: Green: >15,000 the same industry. High levels of working capital per em-
10,000-15,000 ployee indicate that the company can invest in its people
(by means of providing training). Building high levels of
working capital can be costly in taxes.

Overall notes
One of the most important objectives of working capital management is to ensure liquidity. An organization with insufficient
working capital will fail to meet its obligations. Profitability is another important objective of managing working capital. Cash tied
up in working capital will produce no return. Working capital per employee is a measure of productivity, indicating the amount
of working capital generated through the individual work of an organization's employees.
Additional resources
 https://www.accaglobal.com/gb/en/student/exam-support-resources/fundamentals-exams-study-resources/f...
References
1. CERC (2013), Comments on working capital, available at: http://www.cercind.gov.in/2013/regulation/Comments/IOWC.pdf
2. Danske Bank (2009), Working capital management, available at: https://danskebank.se/PDF/Foretag/Rapporter/Report-
Working-Capital-Management-2009.pdf
3. J.P. Morgan (2015), Optimizing cash flow: How to manage working capital, available at: https://www.jpmorgan.com/
jpmpdf/1320675884489.pdf
Scorecard Outlook
Strategic Objective Increase working capital productivity

Current
Performance reference reporting period Trend Target Status
results
$ Working capital per
sK3321 M 20000 16000  20000 
employee
Dashboard Outlook
KPI Results
$ Working capital per employee
M1 18000
20000
M2 15000 19000
18000
16000
M3 16000 16000
15000
M4 19000
M5 20000
M6 16000 M1 M2 M3 M4 M5 M6

KPI 2 % Cost of the finance function from revenue

KPI Record sK3334 Tags inventory, assets, efficiency
Definition Measures the amount spent with financial Subordinate metrics A = $ Expenses with the finance
and accounting activities as a proportion and accounting function
of the total revenue generated B = $ Revenue
by the company.
Calculation formula (A/B)*100
Variations % Finance department costs
% Accounting department costs Trend is good when Decreasing
Related KPIs % Cost of outsourced finance function

% Expenditure with financial system
Focus Data Profile

Purpose To indicate how much of the revenue Data capture period Month
is retained as expenses with the
finance department. It reflects
frequency
how well the finance function is
centralized and standardized, so as to Data collection Internal records,
achieve economies of scale. method Financial statements
BSC perspective Financial Limitations It requires monitoring the finance
function costs and it may be
Objective measured Reduce operating costs difficult to decide the value of the
costs that support just the finance
function.
Targets
   Targets depend on the finance department’s complexity

and the industry in which the company operates.
Red: >5% Yellow: 3-5% Green: <3%
Overall notes
How much is the cost of the finance function as a percentage of total revenues? ‘The average is around 1.4%, says Charles
Tilley, chief executive of the Chartered Institute of Management Accountants (CIMA). ‘That of well-run companies is
somewhere between 0.6% and 0.7%.’ The finance function’s accounting operations can be more efficient if centralised
so that processes can be standardised and economies of scale realised. Whether in-house or outsourced, these shared
service centres can be centres of excellence where expertise is concentrated. Through investment in technology and
skills development, the role of shared service centres in accounts and finance is expanding to include higher value
services such as reporting and analysis. Other support services, especially information technology (IT), human resources
(HR) and procurement may be provided too.
 http://www.cimaglobal.com/Documents/ImportedDocuments/cid_execrep_finance_business_partners_Jul09.pdf
References
1. Fabozzy, F. J. (2004), Financial management and analysis, Second Edition. New Jersey: John Wiley & Sons, available at: https://
leseprobe.buch.de/images-adb/cc/b8/ccb8098b-7bc7-4b3a-98fa-312e98e9b2e8.pdf?
2. Ogilvie, J. (2009), Management accounting: Financial strategy. Oxford: Elsevier, available at: https://www.bookdepository.com/
Management-Accounting-Financial-Strategy-John-Ogilvie/9780750687157?
3. Bacani, C. (2010), Finance-function cost: The 0.6% solution, available at: http://www.cfoinnovation.com/content/finance-
function-cost-06-solution
Scorecard Outlook
Strategic Objective Reduce operating costs

Current
results
% Cost of the finance
sK3334 M 4% 5%  2% 
function from revenue
Dashboard Outlook
KPI Results
% Cost of the finance function from revenue
6%
M1 4% 5%
4% 4%
M2 6%
3% 3%
M3 3%
M4 3%
M5 4%
M1 M2 M3 M4 M5 M6
M6 5%

KPI 3 $ Cost of goods sold (COGS)
Functional Areas Accounting, Cost Analysis Industries Manufacturing, Retail

Sub-categories Cost Analysis Tags cost, goods,
KPI Record sK414 inventory, sales
Definition Measures the cost of the merchandise Subordinate metrics A = $ Beginning inventory (at the
sold within a given time period. beginning of the period)
B = $ Net purchases (period
Variations $ Cost of sales purchases less discounts,
Related KPIs $ Beginning inventory (BI) returns and allowances) plus
$ Ending inventory freight in
% Overhead cost ratio C = $ Ending inventory (at the
$ Cost of services delivered end of the period)
% Value of unaccounted stock Calculation formula A+B-C
$ Packaging cost
Trend is good when Decreasing
Focus Data Profile
Purpose To give an indication on the gross Data capture period Spot

margin, which can be calculated by
subtracting the cost of goods sold
frequency
from total sales.
Data collection Financial Statements, Sales
BSC perspective Financial method Tracking Software, Purchase and
Objective measured Optimize costs Sales Orders History.
Limitations It does not indicate the volume
of activity within the reference
period. The volume of activity can
skew the
results, because a high level of
this KPI could be due to a high
beginning inventory and a low
purchase within that period.
Targets
   Indicator levels vary from business to business and

comparisons should only be made with similar companies,
Red: >15,000 Yellow: 10,000- Green: <10,000 in the same industry. However, the gross profit margin
15,000 (calculated based on this indicator) is more suitable for
comparisons across companies.
Overall notes
It is the largest single expense of most businesses that sell merchandise. It includes only costs directly linked to
the production/ acquisition of the products the company sells. A retailer’s cost of goods sold includes the cost
from its supplier, plus any additional costs necessary to get the merchandise into inventory and ready for sale.
 http://www.stephenlnelson.com/MBAxlch12.pdf
 http://www.swlearning.com/accounting/porteralt3e/instructor/im/pn_chap06.pdf
References
1. Day, J. W. (2008), Cost of goods sold, available at: http://www.reallifeaccounting.com/pubs/Article_Theme_Cost_of_
Goods_Sold.pdf
2. Association of Certified Fraud Examiners (n.d.), How to detect and prevent financial statement fraud, available at:
https://www.acfe.com/uploadedFiles/Shared_Content/Products/Self-Study_CPE/How%20to%20Detect%20and%20
Prevent%20Financial%20Statement%20Fraud%202013_Chapter%20Excerpt.pdf
3. Hoeksema, A. (2012), 3 Ways to Reduce Cost of Goods Sold, available at: http://blog.projectionhub.com/3-ways-to-
reduce-cost-of-goods-sold/
Scorecard Outlook
Strategic Objective Optimize costs

Current
results
$ Cost of goods sold
sK414 M 17500 16500  8000 
(COGS)
Dashboard Outlook
KPI Results
$ Cost of goods sold (COGS)
28000
M1 27000 27000
M2 28000 22000
19000
M3 22000 17500
16500
M4 19000
M5 17500
M6 16500 M1 M2 M3 M4 M5 M6

KPI 4 % Obsolescence costs from total inventory
KPI Record sK6254 Tags costs
Definition Measures inventory obsolescence costs (cost Subordinate metrics A = $ Obsolescence costs
of inventory when no longer deployable to B = $ Inventory
customer) as a percentage of total inventory.
It indicates the effectiveness of the inventory Calculation formula (A/B)*100
management process. Trend is good when Decreasing
Variations % Obsolescence inventory costs
Related KPIs % Obsolete items in inventory
Focus Data Profile
Purpose To reflect the excess of inventory, Data capture period Month

which starts to generate costs, and
its value that was lost.
frequency
BSC perspective Financial Data collection Stock inventory register
Objective measured Optimize costs method Sales records
Limitations Accurate reporting for this KPI
requires the use of a sound
inventory management system.
Targets
   Every company strives for a value of obsolete inventory

as close as possible to zero. A high level of this KPI
Red: >30% Yellow: 10-30% Green: <10% represents a significant decrease in inventory value as they
go obsolescent. Also, it indicates poor management of
revenue cycle and cash flow as the obsolete stock captures
cash and capital.

Overall notes
Failure to focus on obsolete inventory can generate high costs such as financial immobilization, valorization and margin
loss, marking down, storage and surface utilization, and in worst case destruction or recycling.
 http://www.ism.ws/files/Pubs/Proceedings/BCHarding.pdf
 http://www.remassoc.com/portals/0/remprecc.pdf
References
1. Ray, R. (2010), Supply chain management for retailing. New Delhi: Tata McGraw Hill, available at: https://www.amazon.com/
Supply-Chain-Management-Retailing-1E/dp/0070682100
2. Timme, S. G. and Williams-Timme, C. (2003), The real cost of holding inventory, Reed Elsevier, available at: http://www.
mcasolutions.com/pdf/Cost_of_Inventory.pdf
3. Longenecker, J. G., Moore, C. W., Palich, L. E. and Petty, J. W. (2006), Small business management: An entrepreneurial emphasis,
Thirteen Edition. Ohio: South-Western, available at: https://www.amazon.com/Small- Business-Management-Entrepreneurial-
Emphasis/dp/032406554X
Scorecard Outlook

Current
results
% Obsolescence costs
sK6254 M 12% 9%  7% 
from total inventory
Dashboard Outlook
KPI Results
% Obsolescence costs from total inventory
20%
M1 10%
17%
M2 17%
12% 12%
10%
M3 20%
9%
M4 12%
M5 12%
M1 M2 M3 M4 M5 M6
M6 9%

KPI 5 % Gross profit margin
Functional Areas Accounting, Finance, Cost Analysis, Profitability Industries Any

Sub-categories Cost Analysis, Profitability Sub-categories Any
KPI Record sK316 Tags sales, margin, profit
Definition Measures the percentage of projects that are Subordinate metrics A = $ Revenue (sales)
clearly connected to business objectives and B = $ Cost of goods sold
strategies out of the total projects. C = $ Gross income (A-B)
Variations % Gross margin Calculation formula [(A-B)/A]*100 or (C/A)*100
Related KPIs % Predictability of the construction Trend is good when Increasing
project profit
$ Operating margin
Focus Data Profile
Purpose To determine how much a Data capture period Month

company earns taking into
consideration the costs that it
frequency
incurs for producing its products
or services. Its is a key indicator of Data collection Annual financial reports
a company’s overall health. method
BSC perspective Financial Limitations All costs should be taken in
consideration, in order to provide
Objective measured Increase profitability an accurate picture of financial
success and stability.
Targets
   High gross margins are usually targeted by retailers, with

the exception of discount retailers who can operate with
Red: <10% Yellow: 10-50% Green: >50% low margins. Companies with high gross margins will have
more money left to spend on other business operations,
research and marketing.

Overall notes
Cost of goods sold includes variable and fixed costs related directly to the product, excluding indirect fixed costs such as
rent or office expenses. Gross margin must be tracked over time or its decline can lead to cash-flow problems.
 http://yourbusiness.azcentral.com/causes-decline-gross-profit-margin-5298.html
References
1. Queensland Government (n.d.), Calculating profit margins, available at: http://www.business.qld.gov.au/business/running/
making-and-managing-money/making-your-business-moreprofitable/calculating-profit-margins
2. Kokemuller, N. (2013), Why does revenue increase when the gross profit margin decreases?, available at: http://yourbusiness.
azcentral.com/revenue-increase-gross-profit-margin-decreases-2954.html
3. Wibowo, H. (2006), The importance of gross profit margin, available at: http://www.eioba.com/a10648/the_importance_of_
gross_profit_margin
Scorecard Outlook
Strategic Objective Increase profitability

Current
results
% Gross profit margin sK316 M 40% 30%  60% 
Dashboard Outlook
KPI Results
% Gross profit margin
40%
M1 14% 30%
25%
20%
M2 25%
14%
12%
M3 12%
M4 20%
M5 40%
M1 M2 M3 M4 M5 M6
M6 30%

KPI 6 % Operating costs
Functional Areas Accounting, Cost Analysis Industries Financial Institutions
Sub-categories Cost Analysis Sub-categories Banking and Credit
KPI Record sK3159 Tags cost
Definition Measures the percentage of a Subordinate metrics A = $ Operating expenses

company’s income that is spent on its B = $ Operating income
operating costs.
Variations % Cost-to-income ratio
Focus Data Profile
Purpose To evaluate the operational Data capture period Month

performance of a company.
BSC perspective Financial frequency
Objective measured Mantain financial discipline Data collection Financial statements

method
Limitations The higher this ratio, the more
burden there is on the company/
individual to make payments on
his or her debts.
Targets
   The debt-to-income ratio indicates the state of a company’s

financial health. It compares the amount of money earned to
Red: >70% Yellow: 50-70% Green: <50% the amount of money owed to creditors. For most people,
this number comes into play when they are trying to line up
the financing to purchase a home, as it is used to determine
mortgage affordability.

Overall notes
The indicator is most commonly used in the financial sector. It is useful to measure how costs are changing compared to
the income - for example, if a bank’s interest income is rising, but costs are rising at a higher rate looking at changes in
this ratio will highlight this situation.
 https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/566567/BEIS_
Electricity_Generation_Cost_Report.pdf
References
1. Government of Canada (2009), Appendix B: Shelter-cost-to-income-ratio (STIR) and the affordability standard, available at:
http://www.statcan.gc.ca/pub/75f0002m/2008001/aB-eng.htm
2. U.S. Department of State (2010), Summary and highlights: Fiscal year 2010 budget request, available at: http://www.state.gov/
documents/organization/122513.pdf
3. National Transit Database, Federal Transit Administration (2000), National transit summaries and trends: Operating costs and
performance measures, available at: http://www.ntdprogram.gov/ntdprogram/pubs/NTST/00NTST.pdfhttps://www.amazon.
com/gp/search?index=books&linkCode=qs&keywords=9780749466091
3. Omidvar, H. (2008), Project budget & cost management, available at: http://www.montgomerycountymd.gov/omb/resources/
files/omb/pdfs/costestimation/presentation1.pdf
Scorecard Outlook
Strategic Objective Maintain financial discipline

Current
results
% Operating costs sK3159 M 60% 40%  35% 
Dashboard Outlook
KPI Results
% Operating costs
80%
M1 30% 70%
60%
M2 50%
50% 40%
M3 70% 30%
M4 80%
M5 60%
M6 40% M1 M2 M3 M4 M5 M6

KPI 7 $ Payroll tax paid by the employer
Functional Areas Cost Analysis, Accounting, Financial stability, Finance Industries Any
Sub-categories Cost Analysis, Financial stability Sub-categories Any
KPI Record sK5945 Tags employment,
payroll tax
Definition Measures the amount of money spent on Subordinate metrics Ai = $ Payroll tax paid by the
taxes from the employer’s own funds for organization for employee ‘i’, where
each employee, that can be either fixed or i=1 to n
proportionally linked to an employee’s pay. n = # Employees
Variations $ Payroll tax paid by the organization Calculation formula (A1+A2+...+An)/n
Related KPIs $ Payroll expense per employee Trend is good when Decreasing
Focus Data Profile

Purpose To assess the amount of payroll Data capture period Month
taxes an employer has to pay for
its employees. Standard reporting Biannually
frequency
BSC perspective Financial
Data collection Payroll tax records, Financial
method Statements
Objective Measured Increase financial efficiency
Limitations Accurate reporting requires the use
of functional accounting systems
Targets
   Thresholds have just an exemplification purpose, as

targets vary depending on employees’ wages or salary
Red: >150 Yellow: 100-150 Green: <150 level. However, the lower the level, the better from an
employer’s perspective.

Overall notes
Payroll taxes generally fall into two categories: deductions from an employee’s wages, and taxes paid by the employer based on the
employee’s wages. The first kind are taxes that employers are required to withhold from employees’ wages. The second kind is a tax
that is paid from the employer’s own funds and that is directly related to employing a worker..
 http://www.accountingcoach.com/payroll-accounting/explanation/4
 https://data.oecd.org/tax/tax-on-payroll.htm
References
1. Organization for Economic Co-operation and Development (n.d.), Employer versus employee taxation: The impact of employment,
available at: http://www.oecd.org/els/emp/4343154.pdf
2. Brealey, R. A. (2006), Fundamentals of corporate finance, McGraw-Hill Ryerson, available at: http://www.untagsmd.ac.id/files/
Perpustakaan_Digital_1/CORPORATE%20FINANCE%20Fundamentals%20of%20Co...
3. QFinance (2013), Payroll tax, available at: http://www.qfinance.com/dictionary/payroll-tax
Scorecard Outlook
Strategic Objective Increase financial efficiency

Current
results
$ Payroll tax paid by the
sK5945 S 130 120  80 
employer
Dashboard Outlook
KPI Results
$ Payroll tax paid by the employer
130
120
120
S1 100 45%
100
S2 120
S3 130
S4 120
S1 S2 S3 S4

KPI 8 # Interest cover
Functional Areas Cost Analysis, Accounting, Financial stability, Finance Industries Any
Sub-categories Cost Analysis, Financial stability Sub-categories Any
KPI Record sK65 Tags interest, debts
Definition Measures whether the company’s profits can Subordinate metrics A = $ Earnings Before Interest
cover the interest cost on debt. and Taxes (EBIT)
B = $ Net interest paid
Variations # Interest coverage c = $ Interest expense
# Times interest earned
Calculation formula A/B or A/C
Related KPIs # Preferred dividend coverage ratio
# Times interest earned Trend is good when Increasing
$ Net interest income (NII)
Focus Data Profile
Purpose To indicate if there is a risk that Data capture period Spot

profits will not cover the interest
payments.
frequency
BSC perspective Financial Data collection Financial statements
Objective Measured Increase profitability method
Limitations It does not take into account
taxes. If taxes are high, even a
company with a value over 2,
could be at risk of missing interest
payments.
Targets
   TIt is an indicator of the company’s ability to repay loans.

Having debt is not a bad thing if the loans are used to create
Red: <1.5 Yellow: 1.5-2 Green: >2 profits which can repay the debt, the interest and obtain
profits. A ratio above 1.5 or 2 is considered relatively safe.

Overall notes
The lower the ratio, the more the company is burdened by interest expense. When a company’s interest coverage ratio
is 2 or lower, its ability to meet interest expenses may be questionable. An interest coverage ratio below 2 indicates
the company is not generating sufficient revenues to satisfy interest expenses.
 http://www.nersa.org.za/Admin/Document/Editor/file/PetroleumPipelines/Tariffs/Interest%20Cover%20Rat...
 https://data.worldbank.org/indicator/GC.XPN.INTP.RV.ZS?view=chart?http://www.burningtrees.org/2012/09/30/
the-united-states-interest-coverage-ratio/?
References
1. Australia and New Zealand Banking Group Limited (2011), Interest cover, available at: http://www.anz.com/aus/Small-Business/
Tools-Forms-And-Guides/Benchmark-Your-Business/Interest-Cover/default.asp
2. Bized.com.uk (2003), Financial ratio analysis: Interest cover, available at: http://www.bized.co.uk/compfact/ratios/investor15.
htm
3. Moneyterms.co.uk (2011), Interest cover, available at: http://moneyterms.co.uk/interest_cover/
Scorecard Outlook

Current
results
# Interest cover sK65 M 1.7 1.7  3.5 
Dashboard Outlook
KPI Results
# Interest cover 2.3
2.1 2.1
M1 1.1 1.8 1.7
M2 1.8
M3 2.1 1.1
M4 2.3
M5 1.7
M1 M2 M3 M4 M5 M6
M6 2.1

KPI 9 % Contribution margin ratio
Functional Areas Cost Analysis, Accounting Industries Any
KPI Record sK314 Tags revenue, costs, profit
Definition Measures the contribution margin of goods/ Subordinate metrics A = $ Revenue (sales)
services sold relative to revenue. B = $ Variable costs
Variations % Contribution margin to sales Calculation formula [(A-B)/A]*100
Related KPIs $ Variable costs Trend is good when Increasing
$ Contribution margin
Focus Data Profile
Purpose To indicate the fraction of sales Data capture period Month

that contribute to offsetting
variable costs. It is a measure
frequency
of profitability, as the rest of
the revenue covers fixed costs Data collection Financial statements
and dividends. It is useful in method
determining the effect of changes
Limitation In services, measuring unit
in sales on net income.
contribution margin ratio can be
BSC perspective Financial difficult, as variable costs per unit
vary from one item (contract) to
Objective measured Increase profitability another and are difficult to identify.
Targets Analysis and Resources
Threshold examples Overall notes

It can be measured in relation to a sales unit (% Unit
   contribution margin ratio) or to total sales (% Contribution
margin ratio). In the first case, the measures used for
Red: <10% Yellow: 10-30% Green: >30% calculation are: A= $ Unit revenue (Price) and B= $ Unit
variable costs.
Target setting notes
The contribution margin ratio is extremely useful since it
 http://wms-soros.mngt.waikato.ac.nz/NR/Personal/
shows how the contribution margin will be affected by a
Ed%20Vos/includes/publications/Textbookpdf/
change in total sales.
chap9p.pdf
References
1. Carty, S.-L. (2014), What happens if the contribution margin ratio increases?, available at: http://smallbusiness.chron.com/
happens-contribution-margin-ratio-increases-24781.html
2. Australian National Training Authority (2003), Undertake financial planning: Formulas for costing and pricing calculations, available
at: https://www.dlsweb.rmit.edu.au/toolbox/smllbusmang/content/03_underfinplan/download/ufp_formulasforcosting.pdf
3. Carty, S.-L. (2014), How the contribution margin decreases the break-even point, available at: http://smallbusiness.chron.com/
contribution-margin-decreases-breakeven-point-24036.html
Scorecard Outlook

Current
results
% Contribution margin
sK314 M 22% 10%  40% 
ratio
Dashboard Outlook
KPI Results
23%
% Contribution margin ratio
20%
M1 10%
M2 7%
10% 8% 10%
M3 20% 7%
M4 8%
M5 23%
M1 M2 M3 M4 M5 M6
M6 10%

KPI 10 % Overhead cost ratio
Definition Measures the amount represented by the Subordinate metrics A = $ Overhead costs
overhead costs, as a percentage of the cost B = $ Cost of goods sold
of goods sold. Overhead costs refer to the
ongoing expenses needed to operate the Calculation formula (A/B)*100
business (such as rent, salaries and so forth). Trend is good when Decreasing
Variations % Overhead to cost of sales ratio
Related KPIs $ Cost of goods sold (COGS)
Focus Data Profile
Purpose To evaluate the overhead costs, Data capture period Spot

as they are important when
considering changes in the
frequency
production process, or to calculate
the profitability of a product line. Data collection Financial statements
method
Limitations A sound financial system is
Objective measured Reduce operating costs required in order to calculate this
KPI properly.
Targets
   Thresholds have just an exemplification purpose. Overhead

costs tend to be fixed in the short term, while the mostly
Red: >30% Yellow: 20-30% Green: <20% direct costs included in the denominator will vary with
sales. This means that the ratio can vary substantially from
period to period if sales fluctuate considerably.
However, a low level of this KPI is desirable, as it will
benefit the business and its returns.

Overall notes
Given its increasing importance, an overhead cost of sales ratio is needed so that managers can see if there are continuing
increases in overhead costs that require actions to reduce it. The overhead costs include maintenance of machinery,
advertising expenses, depreciation of plant, furniture and various other expenses..
 http://nccsdataweb.urban.org/FAQ/index.php?category=40
 http://www.rand.org/content/dam/rand/pubs/monograph_reports/MR1325/MR1325.ch9.pdff?
References
1. Kenkel, P. (n.d.), Understanding, allocating, and controlling overhead costs, Oklahoma Cooperative Extension Service, available
at: http://www.altfeldinc.com/pdfs/GreatInfo!.pdf
2. Kim, Y.-W. and Ballard, G. (2002), Case study: Overhead costs analysis, available at: http://www.leanconstruction.org/media/
docs/IGLC02Kim-Ballard.pdf
3. Bragg, S. M. (2003), Business ratios and formulas: A comprehensive guide. New Jersey: John Wiley & Sons, available at:
http://160592857366.free.fr/joe/ebooks/tech/Wiley%20Business%20Ratios%20and%20Formulas%20A%20Compreh...?
Scorecard Outlook

Current
results
% Overhead cost ratio sK3053 M 25% 40%  15% 
Dashboard Outlook
KPI Results
% Overhead cost ratio 40%
35%
M1 20%
25%
25%
M2 25%
20% 20%
M3 35%
M4 20%
M5 25%
M6 40% M1 M2 M3 M4 M5 M6

KPI 11 # Cost improvement plans
Functional Areas Procurement / Purchasing, Supply Chain, Procurement, Industries Any
Distribution, Cost Analysis, Accounting Sub-categories Any
Sub-categories Procurement / Purchasing, Cost Analysis Tags improvement plans,costs
KPI Record sK14056
Definition Measures the total number of cost Subordinate metrics A = # Cost improvement plans
improvement plans development by the
organization during the measurement period. Calculation formula A
Variations # CIPs Trend is good when Increasing
Related KPIs # Improvements made to existing

products
Focus Data Profile
Purpose To indicate the number of CIPs Data capture period Spot

aimed at meeting stretching
Standard reporting Quarterly
goals and delivering more for less
frequency
in terms of superior customer
experience and value for money. Data collection Internal records, Project
method portfolio, Internal repositories
BSC perspective Internal Processes
Limitations Maintaining and updating a cost
Objective measured Reduce operating costs improvement plan list is critical
for an accurate reporting of this
KPI. It assures that each cost-
reduction plan is captured on
paper and retained until it has been
objectively evaluated, and either
discarded or implemented.
Targets
   Thresholds have just an exemplification purpose, as targets

vary from one company to another. However, the higher
Red: >5 Yellow: 5-10 Green: >10 the level, the better, as it will improve the company’s
profitability, as long as the cost improvement plans are
efficiently implemented.

Overall notes
The cost improvement plans can be implement both on short, or long term. For instance, Gloucestershire Care Services
NHS Trust developed a CIP for 5 years in order to achieve its strategic objectives, by the end of 2018.
 http://www.kmpt.nhs.uk/Downloads/whats-happening/Trust%20Board%2026%20April%202012/att6%20-%20
Cost%20Improvement%20Programme%202012-13%20to%202014-15%20trust%20board%2026%20apr%20
2012.pdf
 http://www.scrivenerpublishing.com/pdfs/Berk_sample_chapter.pdf
References
1. Simpson, P. (2013), Cost improvement plans: Quality impact assessment (QIA), Healthcare NHS Trust, available at: http://
www.surreyandsussex.nhs.uk/wp-content/uploads/2013/02/3.2-Cost-Improvement-Plans-QIA.pdf
2. City of Hutto (2013), Capital improvements plan FY 2013-2022, available at: http://www.huttotx.gov/documentcenter/
view/3998
3. Gloucestershire Care Services NHS Trust (2013), Cost improvement programme (CIP) strategy 2013-18, available at:
http://www.glos-care.nhs.uk/images/AI-14.2_App_2_CIP_Strategy_v0.6.pdf
Scorecard Outlook
Perspective Internal Processes


Current
results
# Cost improvement plans sK14056 Q 5 4  12 
Dashboard Outlook
KPI Results
Q1 11
7
Q2 7 5
4
Q3 5
Q4 4
Q1 Q2 Q3 Q4

KPI 12 $ Fixed costs
Definition Measures the amount of expenses that are
incurred independent of the company's Subordinate metrics A = $ Rent
output. B = $ Depreciation
C = $ Insurance
Variations $ Costs that are fixed D = $ Property taxes
E = $ Administrative salaries and
Related KPIs $ Fixed cost per employee on-cost
$ Life cycle cost (LCC)
Calculation formula A+B+C+D+E
Focus Data Profile
Purpose To indicate the costs of operating Data capture period Month

the business, no matter the
volume of activity.
frequency
method
Objective measured Reduce operating costs
Limitations Measurement requires an
automated system, as the fixed
costs are not included as such in
the financial statements.
Targets
Fixed costs targets vary depending on company profile,
   size and industry.
Red: >250,000 Yellow: 200,000- Green: <200,000
250,000
Overall notes
Measuring fixed costs can be done in several contexts suMeasuring fixed costs can be done in several contexts such as the
ongoing monthly activity of one company, an investment project and so forth. A fixed cost is a cost that remains the same
with changes in sales volume orboperational activity. Fixed costs can include: amortization, depreciation, insurance, interest
expense, property taxes, rent, salaries, utilities. It may be that a business deliberately structures its fixed costs to be higher
than the variable costs so that it generates more profit per unit produces i.e software companies. Financial management will
look into fixed costs as a most important component of business continuity and sustainability.
 http://www.toolkit.com/small_business_guide/sbg.aspx?nid=P06_7510
 http://www.thetimes100.co.uk/theory/theory--fixed-variable-costs-break-even--122.php
 http://cob.nmu.edu/amtmann/Lavras%20Course%20Materials/Fixed%20and%20Variable%20Costs.pdf
References
1. Abel, A. B. and Eberly, J. C. (2002), Investment and q with fixed costs: An empirical analysis, available at: http://www.kellogg.
northwestern.edu/faculty/eberly/htm/research/invest13.pdf
2. Reiss, B. (2010), Outsoucing turns fixed costs into variable costs, available at: http://www.entrepreneur.com/article/217487
3. Spence, M. (n.d.), Product selection, fixed costs and monopolistic competition, available at: http://www.stern.nyu.edu/
networks/phdcourse/Spence_Product_selection.pdfmanagement guideline, available at:
Scorecard Outlook

Current
results
$ Fixed costs sK3282 M 150000 150000  140000 
Dashboard Outlook
KPI Results
$ Fixed costs
M1 200000 220000
230000
200000
M2 150000
150000
M3 220000 150000 150000
M4 230000
M5 150000
M1 M2 M3 M4 M5 M6
M6 150000

KPI 13 $ Spent on equipment
Functional Areas Accounting, Cost Analysis Industries Hospitality & Tourism
Sub-categories Cost Analysis Sub-categories Food and Beverage Service
KPI Record sK6430 Tags cost, equipment
Definition Measures the value of the investment made Subordinate metrics A = $ Equipment related
in operational equipment, both for acquisition expenses in a given period
and maintenance.
Calculation formula A
Variations $ Equipment expenses
Trend is good when Within range
Related KPIs # Weight of linen laundered per day
Focus Data Profile
Purpose To indicate how much the Data capture period Quarter

company invests in adequate
Standard reporting Quarterly
equipment, as this is an enhancer
frequency
of both productivity and customer
satisfaction. Data collection Financial Statements
method
BSC perspective Internal Processes
Limitations Accurate reporting requires
Objective measured Optimize costs collecting data from the accounting
systems, which might not be
available in short times.
Targets
   As it is a measure that indicates high levels of automation

(enhancing staff productivity and more precise service
Red: <5,000; Yellow: 5,000- Green: 10,000- operations), high levels are usually good to achieve. They
>20,000 10,000; 15,000- 15,000 also reflect that sales were good, thus allowing investments.
20,000

Overall notes
Although affecting cash-flow due to the need to advance greater amounts of money than the current expenses, buying
new equipment is also helpful in the periods to come, depreciation representing an endogenous financing source.
 http://eu.wiley.com/WileyCDA/WileyTitle/productCd-EHEP002981.html?
References
1. Drysdale, J. A. (2009), Restaurant food service equipment, Prentice Hall, available at: https://www.amazon.com/
Restaurant-Food-Service-Equipment-Drysdale/dp/0135017882/?
2. Martin, I. M. and Martin, W. E. (2009), The greening of Long Beach restaurants, College of Business Administration,
California State University, available at: http://www.csulb.edu/colleges/cba/dean/news/documents/Greening_of_LB_
Restaurant_Industry_Report.pdf
3. Katsigris, C. and Thomas, C. (2008), Design and equipment for restaurants and foodservice: A management view,
Third Edition, John Wiley & Sons, available at: http://books.google.com/books?id=IRW5xjtG5UAC&printsec=frontcover
&hl=ro&source=gbs_ge_su...
Scorecard Outlook
Perspective Internal Processes


Current
results
$ Spent on equipment sK4732 Q 5000 8000  12000 
Dashboard Outlook
KPI Results
$ Spent on equipment
8000
Q1 6000 6000
Q2 3000 5000
3000
Q3 5000
Q4 8000
Q1 Q2 Q3 Q4

KPI 14 $ Life cycle cost (LCC)
Functional Areas Procurement / Purchasing, Supply Chain, Procurement, Industries Any
Distribution, Cost Analysis, Accounting Sub-categories Any
Sub-categories Procurement / Purchasing, Cost Analysis Tags cost,life cycle
KPI Record sK7059
Definition Measures the aggregated cost of owning an Subordinate metrics A = $ Costs for purchase and
asset or equipment over its life cycle. installation
B = $ Other costs during the
Variations $ Whole of life (WOL) cost whole life of the asset,
$ WOL e.g. depreciation, fuel,
Related KPIs $ Fixed costs maintenance, repairs, etc.
Calculation formula A+B
Focus Data Profile
Purpose To evaluate asset alternatives in Data capture period Spot

terms of the total cost over their
Standard reporting Other
life cycle.
frequency
Objective Reduce operating costs method
Limitations Data collection for this KPI requires
a reliable prediction of the costs
involved over the asset’s life time.
Also, discounting future costs to
the present is needed.
Targets
   The components of costs vary considerably among different

asset types. Targets are highly contextual.
Red: >20,000 Yellow: 10,000- Green: <10,000
20,000
Overall notes
Life cycle costing is a process to determine the sum of all the costs associated with an asset or part thereof, including
acquisition, installation, operation, maintenance, refurbishment and disposal costs. It is therefore pivotal to the asset
management process. This KPI is commonly used for large investments such as buildings, equipment and systems.
 http://www.clemson.edu/ces/arts/LCCAARPM.pdf
References
1. Heidler, C. D. (1994), Life cycle costing: Getting approval for the budget you need, Clarion University of Pennsylvania, available
at: http://www.passhe.edu/inside/anf/Fac/Documents/Facilities%20Manual/Apx-6d-1.pdf
2. Stanford University (2005), Guidelines for life cycle cost analysis, available at: http://lbre.stanford.edu/sites/all/lbre-shared/
files/docs_public/LCCA121405.pdf
3. Office of Industrial Technologies (2001), Pump life cycle costs: A guide to LCC analysis for pumping systems, available at:
https://www1.eere.energy.gov/manufacturing/tech_assistance/pdfs/pumplcc_1001.pdf
Scorecard Outlook

Current
results
$ Life cycle cost (LCC) sK7059 Y 22000 21000  9000 
Dashboard Outlook
KPI Results
$ Life cycle cost (LCC)
22000 22000
21000
Y1 19000
19000
Y2 22000
Y3 22000
Y4 21000
Y1 Y2 Y3 Y4

KPI 15 # Sales to general and administrative expenses
Definition Measures the general and administrative Subordinate metrics A = $ Net sales
expenses in relation to the total sales revenue. B = $ General and administrative
expenses
Variations # Sales to administrative expenses
Calculation formula A/B
Related KPIs $ Selling, general and administrative expenses
(SG&A expenses) Trend is good when Increasing
Data Profile
Data capture period Month
Focus Standard reporting Monthly

frequency
Purpose To indicate the degree at which Data collection Financial statements, Sales
the sales revenue covers the costs method reports
of administering the business.
Limitations Automating measurement requires
BSC perspective Financial synchronizing the sales and the
accounting systems.
Targets
   Targets are only for illustration purposes. The actual targets

depend on the type of business and industry.
Red: <15 Yellow: 15-20 Green: >20

Overall notes
Measuring this indicator is important for evaluating how Additional resources
many overhead expenses are needed to maintain a certain  http://www.apec.umn.edu/staff/gcooper/Chapter%20
level of sales. It also helps controlling the administrative 3%20Ppt.pdf
expenses so they won’t impact negatively on the profits.  http://www.spireframe.com/docs/financial_ratio_sales_
to_administrative_expenses.asp.
References
1. Bragg, S., M. (2006), Business ratios and formulas, Second Edition, John Wiley & Sons
2. Kang, P. and Hu, Z. (2009), Organization cost, sales, general and administrative expenses and management cost, Innovation
Management and Industrial Engineering, Vol. 26-27, Pages 243-249
3. Accountingtools.com (2014), What is selling, general and administrative expense, available at: http://www.accountingtools.
com/questions-and-answers/what-is-the-selling-general-and-administrativeexpense.html
Scorecard Outlook

Current
results
# Sales to general and
sK3286 M 25 24  25 
administrative expenses
Dashboard Outlook
KPI Results
# Sales to general and administrative expenses 25
24
M1 20 20 19
18
16
M2 18
M3 16
M4 19
M5 25
M1 M2 M3 M4 M5 M6
M6 24

KPI 16 $ Operating expenses
KPI Record sK192 Tags operating expenses,
expenses, costs
Definition Measures the company’s expenses during Subordinate metrics A = $ Rent

regular business activities in a given time B = $ Depreciation
period. Generally represents a separate item to C = $ Salaries and on-costs
the cost of goods sold (cost of sales). D = $ Utilities expense
E = $ Supplies expense
Variations $ OPEX F = $ Other operating expense
$ Operating expenditure
$ Operating cost Calculation formula A+B+C+D+E+F
Related KPIs % Combined ratio Trend is good when Within range
% Operating costs
$ Operating expense per vehicle- Data Profile
kilometers
$ Operating expense per passenger Data capture period Year to date
% Operating expenses paid from
endowment proceeds Standard reporting Monthly
$ Cost of food material frequency
# Expense ratio Data collection Financial statements
$ Property running costs method
Limitations It does not include financial and
extraordinary expenses, which both
influence the bottom line.
Focus Targets
Purpose To indicate the costs involved in Threshold examples

operating activities, as an increase
in operating expenses leads to a   
reduction in operating income if
Red: >12,000 Yellow: 10,000- Green: <10,000
revenue remains the same.
12,000
Result levels vary from business to business and
comparisons should only be made with similar companies
in the same industry. A more suitable indicator for
benchmarking is $ Operating profit.

Overall notes
Other operating expenses may include interest on loans (only for financial institutions), or training.
 http://beginnersinvest.about.com/od/incomestatementanalysis/a/operating-expense.htm
References
1. Agile BI Melbourne (2008), Developing performance metrics that drive decision making, available at: http://www.slideshare.
net/victorholman/developing-metrics-that-drive-performance-success
2. Alpar, P. & Kim, M. (1990), A microeconomic approach to the measurement of information technology value, journal of
management information systems, Vol. 7, No. 2, pp. 55-69
3. Horngren, C., T., Harrison, W., T. & Bamber, L., S. (2003), “Accounting”, 6th Edition, Prentice Hall
4. KPI Drafting Group (2001), Working paper: cost effectiveness and productivity KPIs, available at: http://www.eurocontrol.int/
prc/gallery/content/public/Docs/kpi.pdf
5. Vodafone (2008), Annual report 2008, available at: http://www.vodafone.com/content/annualreport/annual_report08/
performance/kpis/strategic_kpis.html
Scorecard Outlook

Current
results
$ Operating expenses sK192 M 12000 11000  8000 
Dashboard Outlook
KPI Results
$ Operating expenses
M1 12000 12000 12000
11500
11000
M2 10000 10000 10400
M3 11500
M4 10400
M5 12000
M1 M2 M3 M4 M5 M6
M6 11000

KPI 17 $ Cost accrual ratio
Definition Measures the average cost per person for a Subordinate metrics A = $ Personnel costs
given unit of time (for example, cost per day of B = # Persons
one individual). C = # Unit of time
Variations $ Cost accrual Calculation formula A/B/C
Related KPIs % Wages cost from sales Trend is good when Decreasing
Focus Data Profile
Purpose To assess the costs incurred with Data capture period Day
the company’s personnel.
BSC perspective Financial frequency
Objective measured Reduce operating costs Data collection Financial statements

method
Limitations Accurate data gathering requires a
tracking system of all costs per each
employee for a given unit of time.
It is important to clearly identify all
the costs with employees, which
are more than their hourly wage
(i.e. payroll taxes, benefits, tools,
equipment etc.).
Targets
   Thresholds have just an illustrative purpose, as they vary

from one industry, company to another. However, an
Red: >25 Yellow: 20-25 Green: <20 optimal level of this KPI is required, in order to maintain a
high level of employees’ satisfaction, but also to ensure a
cost-effective approach to benefit employers.

Overall notes
Generally, employers want to present themselves in the best light to current and prospective employees to gain a competitive
edge. One commonly overlooked point of differentiation is the total compensation package that an employer offers - not
just take-home salary, but the benefits and other job attributes that can constitute a significant portion of employees’ overall
compensation. According to the U.S. Department of Labor, private industry employers spend and average of $29,63 per hour
worked for total employee compensation in December 2013. Wages and salaries averaged $20.76 per hour worked. Regarding
the paid leave costs in private industry, employer costs for paid leave benefits averaged $2.05 per hour worked.
 http://www.aiu.edu/publications/student/english/Financial-Risk-Management.html
 http://www.tsheets.com/resources/determine-the-true-cost-of-an-employee
References
1. Bureau of Labor Statistics, U.S. Department of Labor (2014), Employer costs for employee compensation - December 2013,
available at: http://www.bls.gov/news.release/pdf/ecec.pdf
2. Center for Advanced Human Resources Studies, Cornell University (2010), Employee compensation: Know the true costs of
employment and optimize them to benefit employers, employees, Number 8, available at: http://digitalcommons.ilr.cornell.edu/
cgi/viewcontent.cgi?article=1015&context=cahrs_researchlink
3. Clifford, C. (2010), Why a $14/hour employee costs $20, available at: http://money.cnn.com/2010/03/26/smallbusiness/
employee_costs/
Scorecard Outlook

Current
results
$ Cost accrual ratio sK3158 M 20 26  16 
Dashboard Outlook
KPI Results
$ Cost accrual ratio
26
M1 22 25
22
M2 25 20 20
M3 20 17
M4 17
M5 20
M1 M2 M3 M4 M5 M6
M6 26

KPI 18 $ Indirect costs
KPI Record sK3284 Tags overhead, costs
Definition Measures the expenses of doing Subordinate metrics A = $ Management costs

business that are not readily identified B = $ Accounting costs
with a particular grant, contract, C = $ Legal costs
project foundation or activity, but are D = $ Other costs
necessary for the general operation of
the organization and the conduct of Calculation formula A+B+C+D
activities it performs. Trend is good when Within range
Variations $ Overhead expenses
$ Burden expenses
Data Profile
Related KPIs $ Total acquisition cost (TAC)
% Indirect expenses per sales
$ Additional dollar-based management
costs Standard reporting Quarterly
frequency
Data collection Financial statements
Focus method
Limitations Accurate data gathering requires
Purpose To determine the indirect costs
a sound financial system to
required to keep the organization
monitor all indirect costs during the
running.
measurement period.
Targets
   Thresholds given are for reference only. Indirect costs

are an important consideration in the analysis of most
Red: <1,000; Yellow: 1,000- Green: 1,500- cost proposals, the share of total cost that they represent
>2,500 1,500; 2,000- 2,000 will vary from firm to firm and industry to industry. For
2,500 example, indirect costs to represent a larger share of a cost
proposal for industrial production might be higher than for
contract services.
Overall notes
Indirect costs are costs that cannot be attributed to specif cost objects, however they are considered fixed costs
nonetheless. Indirect costs that are related to production processes are known as production overhead, while costs
associated with general and administrative areas are commonly known as administrative overhead. A business will
identify its indirect costs in order to exclude them from short term pricing decisions and have a complete overview on
financial operations.
Indirect costs can include: utilities, rent, audit and legal, administrative staff, equipment rental.
 http://www2.ed.gov/about/offices/list/ocfo/intro.html
References
1. Bill and Melinda Gates Foundation (2012), Indirect cost policy for project grants and contracts for applicant organizations,
available at: https://docs.gatesfoundation.org/Documents/Indirect_Cost_Policy.pdf
2. United States Department of Labor (2012), A guide to indirect cost rate determination, available at: http://www.dol.gov/
oasam/programs/boc/costdeterminationguide/cdg.pdf
3. Charles Stewart Mott Foundation (n.d.), Indirect versus direct costs, available at: http://www.mott.org/grantsandguidelines/
ForGrantees/accounting/indirectvsdirect
Scorecard Outlook

Current
results
$ Indirect costs sK3284 Q 1500 1200  1600 
Dashboard Outlook
KPI Results
$ Indirect costs 1500 1500
1200
Q1 1000
1000
Q2 1500
Q3 1500
Q4 1200
Q1 Q2 Q3 Q4

KPI 19 $ Total acquisition cost (TAC)
KPI Record sK3088 Tags aquisition costs
Definition Measures the entire costs associated with Subordinate metrics A = $ Customer order entry and
the delivery of a product or service. processing
B = $ Acquisition of bought in
Variations $ Asset acquisition cost materials and services
C = $ Supplier's raw material and
internal costs
D = $ Quality costs
Focus E = $ Assembly or conversion
F = $ Freight - inbound and
Purpose To identify and eliminate/ minimize outbound
all non-value added activities in G = $ Administration
the supply chain for a nominated H = $ Cost to receive and make
product. ready
BSC perspective Financial Calculation formula A+B+C+D+E+F+G+H
Objective measured Reduce operating costs Trend is good when Decreasing
Targets Data Profile
Threshold examples Data capture period Spot

   frequency
Red: >200 Yellow: 100-200 Green: <100
method
Limitations Accurate data gathering requires
Thresholds have just an illustrative purpose. In order to a streamlined financial system to
reduce TAC, it is necessary to consider not just the basic capture all the relevant data.
product cost, but the entire process costs. Some of the
solutions refer to: supplier reduction, focusing on process
not just price, energy efficiency, or extending the working
life of equipment.
Overall notes
Measuring the TAC for products and services requires a view of the market as global, highly competitive and dynamic
with a big chance of dramatic changes in supply chain behavior driven by rapid technical innovation and changing
capacity. Understanding and monitoring these forces is probably the best way to monitor and control the TAC.
 http://www.supplymanagement.com/resources/q-and-a/2004/measuring-total-acquisition-cost/
 http://www.supplychainexcellence.co.uk/PDFs/TotalAcquisitionCostprocess.pdf
 http://www.rand.org/content/dam/rand/pubs/monograph_reports/MR1362/MR1362.ch5.pdf
References
1. Song, N., Platts, K. and Bance, D. (n.d.), Total acquisition cost of overseas outsourcing/sourcing: A framework and a
case study, Journal of Manufacturing Technology Management, 18(7): 858-875, available at: http://www.researchgate.net/
publication/242343485_Total_acquisition_cost_of_overseas_outsourcingsourcing_a_framework_and_a_case_study
2. Chakravarty, C. A. and Naware, C. S. (2008), Cost-effectiveness analysis for technology acquisition, available at: http://
medind.nic.in/maa/t08/i1/maat08i1p46.pdf
3. Macroplan Australia (2010), A benefit cost analysis: Outsourcing of acquisitions, cataloguing and processing in NSW
Public Libraries, available at: http://www.sl.nsw.gov.au/services/public_libraries/docs/benefit_cost_analysis.pdf
Scorecard Outlook

Current
results
$ Total acquisition cost
sK3088 M 200 150  80 
(TAC)
Dashboard Outlook
KPI Results
$ Total acquisition cost (TAC) 200
170
150
M1 130
150 140
M2 150 130
M3 170
M4 140
M5 200
M1 M2 M3 M4 M5 M6
M6 150

KPI 20 % Wages cost from sales
KPI Record sK140 Tags wage, cost
Definition Measures the amount of money needed to Subordinate metrics A = $ Wages cost
cover wages and salaries from the total sales B = $ Sales revenue
revenue.
Variations % Salary cost from total sales
% Wage expense from total sales Trend is good when Decreasing
Related KPIs % Compensation and benefits cost to

annual sales turnover Data Profile
$ Cost accrual ratio
Data capture period Rolling average
Focus Standard reporting Monthly
frequency
Purposz To indicate a cost-benefit rate
between the expenses with wages Data collection Financial statements. employee
and the sales generated, as usually method records, sales reports
wage expenses are an important Limitations Accurate data reporting for this KPI
component that must be deducted requires access and data gathering
from the sales revenue, when of financial figures for both wages
calculating firm profitability. costs and sales revenue.
Object measured Reduce operating costs
Targets
   The threshold examples vary according to the industry, the

business development stage and the salary schemes used.
Red: >40% Yellow: 30-40% Green: <30% The ones above serve just for exemplification purpose.
A high level of this KPI indicates that the employees are
performing poorly or having difficulties in selling the
companies’ products and/or services.

Overall notes
This KPI indicates the balance between the investment in workforce and the generated sales and it is most frequently
used within the sales team.
 http://www.oldandsold.com/articles11/distribution-19.shtml
References
1. Meager, N. and Speckesser, S. (2011), Wages, productivity and employment: A review of theory and international
data, Institute for Employment Studies, available at: http://www.eu-employmentobservatory.net/resources/reports/
WagesProductivityandEmployment.pdf
2. Cascio, W. F. (2006), The high cost of low wages, Harvard Business Review, available at: http://hbr.org/2006/12/the-high-
cost-of-low-wages/ar/1
3. M&T Bank (n.d.), Understanding where you stand: A simple guide to your company’s financial statements, available at:
https://www.mtb.com/business/businessresourcecenter/Documents/brc_finstatement.pdf
Scorecard Outlook

Current
Performance reference reporting period Trend Target Results
results
% Wages cost from sales sK140 M 10% 20%  10% 
Dashboard Outlook
KPI Results
% Wages cost from sales 50%
M1 30%
30% 30%
M2 50%
20% 20%
M3 30% 10%
M4 20%
M5 10%
M1 M2 M3 M4 M5 M6
M6 20%

KPI 21 $ Fixed cost per employee
Definition Measures the average amount of Subordinate metrics A = $ Fixed costs

expenses per each employee that are B = # Employees
not dependent and do not change in
relation to the company’s activities. Calculation formula A/B
Variations $ Overhead per employee Trend is good when Decreasing
Focus Data Profile
Purpose To indicate the level of fixed costs, Data capture period Month
independent of the level of output
generated by the business.
frequency
BSC perspective Financial Data collecion method Financial statements
Objective measured Reduce operating costs Limitations Accurate data gathering requires a
sound financial system to capture
the relevant data.
Targets
   Thresholds have just an exemplification purpose, as targets

vary from one company to another, according to their
Red: >400 Yellow: 200-400 Green: <200 remuneration system and benefits offered.

Overall notes
Fixed costs remain the same regardless of a company’s level of sales. Depending on the type of business, some typical examples
would be rent, interest on debt, insurance, and salary of permanent full-time workers.
 http://www.toolkit.com/small_business_guide/sbg.aspx?nid=P06_7510
References
1. NC State of University (n.d.), Costs and decision making, available at: http://www4.ncsu.edu/~rsawyers/webpage/acc220/
Chapter5.pdf
2. Hofstrand, D. (2007), Managerial costs, available at: http://www.agmrc.org/business_development/getting_
preparedbusiness_and_economic_concepts_and_principles/managerial-costs/
3. Rural Women’s Network (2006), Start your own business: Business viability, available at: http://www.ruralwomen.org.uk/
pdfs/book4businessviability.pdf
Scorecard Outlook

Current
results
$ Fixed cost per employee sK3217 M 600 450  95% 
Dashboard Outlook
KPI Results
$ Fixed cost per employee
700
M1 700 650
600
M2 550 550
450
420
M3 420
M4 650
M5 600
M6 450 M1 M2 M3 M4 M5 M6

KPI 22 $ Overdue invoices
Definition Measures the average value of all the Subordinate metrics A = $ Overdue invoices value
invoices not paid in due time. B = # Overdue invoices
Variations $ Average value of invoices not paid in due Calculation formula A/B
time
Related KPIs $ Invoice value
# Overdue invoices
Focus Data Profile
Purpose To assess the company’s efficiency in Data capture period Month

dealing with customers that do not pay
their invoices in due time.
frequency
Object measured Increase financial efficiency method
Limitations For an accurate reporting of this
KPI, an invoice tracker is required
to monitor the company’s accounts
Overall notes receivable. Usually an invoice
tracker consists of several fields
Having a healthy cash-flow is paramount to any company’s
related to payment dates, customer
survival and success, so it is important to learn how to
name, amount due, amount paid,
tackle overdue invoices and ensure you get paid. What
and amount outstanding.
companies can do is to: * Set expectations: With every new
client to establish payment terms as early as possible; *
Warn about interest on late payments: Governments have Targets
legislation to protect small businesses against late payers; *
Set up decent accounting: Some system, like FreeAgent are Threshold examples
useful to track time, invoice and send statements; * Lessen
the risk: Companies may ask for a percentage upfront or   
full payment before work even begins, and so forth.
Red: >100,000 Yellow: 50,000- Green: <50,000
100,000
 https://iihelp.iinet.net.au/Overdue_invoices Target setting notes
 http://creativeboom.co.uk/tips/how-to-tackle-
overdue-invoices-and-ensure-you-get-paid/ Thresholds have just an illustrative purpose, as targets vary
 http://office.microsoft.com/en-us/templates/invoice- from one company to another, according to its strategies,
tracker-TC010355188.aspx customers, industry in which it activates. However, a low
level of this KPI is required in order to ensure the business
maintains or improves its market position.
References
1. Skinner, D. E. (2011), How to get your overdue invoices paid by lighting a fire under the customer, available at: http://www.
avvo.com/legal-guides/ugc/how-to-get-your-overdue-invoices-paid-by-lighting-a-fire-under-thecustomer
2. Transverse (2014), Invoice overdue report, available at: http://tract.gotransverse.com/Invoice-Overdue-Report
3. The Accounts Payable Accounts (2008), The importance of AP in managing cash flow, Volume 1, Number 3, available at: http://
www.theaccountspayablenetwork.com/html/library/newsletters/apmonthly_1108.pdf
Scorecard Outlook
Strategic Objective Increase financial efficiency

Current
results
$ Overdue invoices sK3254 M 55000 70000  40000 
Dashboard Outlook
KPI Results
$ Overdue invoices 90000
M1 55000
72000
70000
M2 65000 65000
55000
M3 90000 55000
M4 72000
M5 55000
M6 70000 M1 M2 M3 M4 M5 M6

KPI 23 $ Discretionary costs
Definition Measures the value of costs that can Subordinate metrics A = $ Discretionary costs
be curtailed or even eliminated in the
short term without having an immediate Calculation formula A
impact on the short-term profitability of Trend is good when Decreasing
a business.
Variations $ Discretionary expenditure
$ Managed costs Data Profile
Related KPIs % Discretionary costs from sales Data capture period Month
Focus frequency
Purpose To indicate the company’s efforts
method
to control its spending and
increase profits. Limitations Accurate data gathering requires a
sound financial system to capture
BSC perspective Financial the relevant data. Finance experts
Objective measured Reduce operating costs may also use budgets to track the
company’s expenses.
Targets
   The threshold given has just an illustrative purpose, as targets

are set depending on what discretionary spending may
Red: >1,500 Yellow: 1,000- Green: <1,000 include. A prolonged period of reduction in discretionary
1,500 costs is not desirable, as gradually reduces the quality of a
company’s product pipeline, reduces awareness by customers,
increases machine downtime and may also decrease product
quality and increase employee turnover.

Overall notes
The key to determining discretionary costs is identifying expenditures that can be cut, which can save money without
disrupting the operations of the company. If cutting the cost decreases the bottom line of the business in any way, then
the expenditure may be necessary. Discretionary costs include employee travel, advertising, research and development,
training, repairs, maintenance and any other similar costs.
 https://www.transportation.gov/sites/dot.gov/files/docs/mission/office-policy/transportation-policy/284031/
benefit-cost-analysis-guidance-2018_0.pdf
 http://www.krantcents.com/how-do-you-track-your-expensesf
References
1. Bragg, S. (2010), What is a discretionary cost?, available at: http://www.accountingtools.com/questions-andanswers/what-is-a-
discretionary-cost.html
2. Government of Nova Scotia (2008), Budgeting and financial management manual: Discretionary spending, available at: http://www.
novascotia.ca/treasuryboard/manuals/PDF/200/20304-04.pdf
3. Financial ConsumerAgency of Canada (2014), Expenses, available at: http://www.fcacacfc.gc.ca/Eng/resources/educationalPrograms/
ft-of/Pages/ieb-3-5.aspx
Scorecard Outlook

Current
results
$ Discretionary costs sK3153 M 860 750  700 
Dashboard Outlook
KPI Results
$ Discretionary costs 900
800 860
M1 800 750
750
650
M2 900
M3 650
M4 750
M5 860
M1 M2 M3 M4 M5 M6
M6 750

KPI 24 $ Costs per FTE employee
Definition Measures the expenditures generated Subordinate metrics A = $ Costs

by running the business on average per B = # Full time equivalent (FTE)
FTE employee. employee
Variations $ Expenditures per FTE employee Calculation formula A/B
$ Costs per FTE
Related KPIs # Monthly room revenue divided by total
payroll and benefits
Focus Data Profile
Purpose To indicate the costs involved by Data capture period Month

the existence and management
of the business and company per
frequency
each FTE employee.
Data collection Financial statements, Payroll
BSC perspective Financial method data tables, Salary fields, Bonus
Objective measured Reduce operating costs potential fields
Limitations Accurate data gathering is
dependent on monitoring the
accounting information and the
FTE employee data.
Targets
   Targets may vary widely according to the company profile, the

business type and the total cost encountered. The higher the
Red: >10,000 Yellow: 2,000- Green: <2,000 costs per FTE employee is, the lower the profitability per FTE
10,000 gets.
Overall notes
The KPI indicates the total costs as represented by financial compensation and benefits paid to a full time equivalent over
a pre-determined period of time. Wage expense is generally the largest operating expense in terms of human capital, and
productivity is expected as a return on that investment. Most companies keep close track of costs with full time equivalents
to monitor the manner in which expenses are managed.
 https://vpsc.vic.gov.au/html-resources/a-dictionary-of-people-metrics/33-total-compensation-expense-...?
 http://www.community.nsw.gov.au/annual_report09/improve_workforce.htm?https://nces.ed.gov/fastfacts/display.
asp?id=75?
References
1. Society for Human Resource Management (2016), Human capital benchmarking report, available at: https://www.shrm.org/
hr-today/trends-and-forecasting/research-and-surveys/Documents/2016-Human-Capit...?
2. European Commission (2017), ?Unit costs for direct personnel costs, available at: http://ec.europa.eu/eurostat/
documents/10186/7970019/Guideline-unit-costs.pdf
3. State Higher Education Executive Officers Association (2010), Degree production and cost trends, available at: http://www.
sheeo.org/sites/default/files/publications/Degree_Production_and_Cost_Trends.pdf?
Scorecard Outlook

Current
results
$ Costs per FTE employee sK2267 M 1500 1750  1300 
Dashboard Outlook
KPI Results
$ Costs per FTE employee
2000
M1 1500
1750
1500
M2 1300 1500
1350
M3 1350 1300
M4 2000
M5 1500
M1 M2 M3 M4 M5 M6
M6 1750

KPI 25 % Cost with employees from the operating revenue
KPI Record sK3333 Tags cost,employee
Definition Measures the value of staff costs Subordinate metrics A = $ Employees costs
(wages, bonuses etc.), as a percentage of B = $ Operating revenue
the total operating revenue.
Variations % Employees costs from the operating
revenue Trend is good when Within range
% Workforce costs from the operating
revenue
Related KPIs $ Operating revenue per employee Data Profile

Focus
Purpose To indicate the efficiency in frequency
managing the organization’s Data collection Financial statements
biggest cost, the workforce.
Limitations General ledger systems and budget
BSC perspective Internal Processes tools manage cost centers are
useful to keep a constant track of
workforce costs.
Targets
   While an organization’s total cost of workforce percentage

may vary, with few exceptions these costs remain the single
Red: >60% Yellow: 50-60% Green: <50% biggest organizational expense.
In order to enhance the results of this KPI, top management,
finance and HR should be capable to systematically assess
and surgically implement workforce cost management
practices at a level below the company wide mandate but
above the individual manager level.
Overall notes
According to a 2006 SHRM survey of 700 companies, including a significant number of Fortune 500 companies, total human
capital costs also known as total cost of workforce, average nearly 70% of operating expenses.
 http://www.shrm.org/research/articles/articles/pages/metricofthemonthsalariesaspercentageofoperatingexpense.
aspx
 http://www.orgplan.eu/OrgPlanPDF.php.
References
1. Human Capital Management Institute (n.d.), Managing an organization’s biggest cost: The workforce, available at: http://www.
hcminst.com/files/OrgPlus_Total_Cost_Workforce_.pdf
2. Appelblad, A. S. and Lonn, S. (2004), A study of workforce management, IT University of Goteborg, available at: https://gupea.
ub.gu.se/bitstream/2077/1172/1/Nr_13_AS,SL.pdf
3. National Industry Skills Committee (2008), Good practice workforce strategies: Case studies, available at: http://education.qld.
gov.au/staff/development/performance/resources/readings/good-practices-guides.pdf
Scorecard Outlook

Current
results
% Cost with employees
from the operating sK3333 M 50% 55%  40% 
revenue
Dashboard Outlook
KPI Results
% Cost with employees from the operating revenue 60%
55% 55%
M1 40%
50%
M2 60% 45%
40%
M3 45%
M4 55%
M5 50%
M6 55% M1 M2 M3 M4 M5 M6

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Top 25 Human Resources KPIs - 2016 Extended Edition Top 25 Production KPIs - 2016 Extended Edition
Top 25 Compensation and Benefits KPIs - 2018 Edition Top 25 Quality Management KPIs - 2016 Extended Edition
Top 25 Efficiency and Effectiveness KPIs - 2018 Edition Top 25 Customer Service KPIs - 2016 Extended Edition
Top 25 Recruitment KPI– 2018 Edition Top 25 Sales KPIs - 2016 Extended Edition
Top 25 Retention KPIs - 2018 Edition Top 25 Supply Chain*, Procurement, Distribution KPIs - 2016 Extended Edition
Top 25 Service Delivery KPIs - 2018 Edition Top 25 Contract Management KPIs - 2016 Extended Edition
Top 25 Talent Development KPIs - 2018 Edition Top 25 Inventory Management KPIs - 2016 Extended Edition
Top 25 Workforce KPI– 2018 Edition Top 25 Logistics / Distribution KPIs - 2016 Extended Edition
Top 25 Information Technology KPIs - 2016 Extended edition Top 25 Procurement / Purchasing KPIs - 2016 Extended Edition
Top 25 Application Development KPIs - 2016 Extended Edition Top 25 Supply Chain Management KPIs - 2016 Extended Edition
By Industry Top 25 Ports KPIs - 2018 Edition

Top 25 Railways KPIs - 2018 Edition
Top 25 Crops KPIs - 2018 Edition Top 25 Roads KPIs - 2018 Edition
Top 25 Forestry and Logging KPI– 2018 Edition Top 25 Broadcasting (TV and Radio) KPIs - 2018 Edition
Top 25 Livestock, Hunting and Fishing KPIs - 2018 Edition Top 25 Film and Music KPIs - 2018 Edition
Top 25 Event Production and Promotion KPIs - 2018 Edition Top 25 Social Media KPIs - 2018 Edition
Top 25 Libraries and Archives KPIs - 2018 Edition Top 25 NGO KPIs - 2016 Extended Edition
Top 25 Museums KPIs - 2018 Edition Top 25 Recruitment / Employment Activities KPIs -2018 Edition
Top 25 Civil Engineering KPIs - 2018 Edition Top 25 Postal and Courier Services KPIs - 2018 Edition
Top 25 Construction of Buildings KPIs - 2018 Edition Top 25 Business Consulting KPIs - 2016 Extended Edition
Top 25 Customs KPIs - 2016 Extended Edition Top 25 Accounting Services KPIs - 2018 Edition
Top 25 Border Protection and Enforcement KPIs - 2018 Edition Top 25 Engineering KPIs - 2018 Edition
Top 25 Immigration and Travel KPIs - 2018 Edition Top 25 Legal Practice KPIs - 2018 Edition
Top 25 Trade Facilitation KPIs - 2018 Edition Top 25 Property Management KPIs - 2018 Edition
Top 25 Academic Education KPIs - 2016 Extended Edition Top 25 Real Estate Development KPIs - 2016 Extended Edition
Top 25 Colleges and Universities KPIs - 2016 Extended Edition Top 25 Real Estate Transactions KPIs - 2018 Edition
Top 25 Primary and Secondary Schools / K-12 KPIs - 2018 Edition Top 25 Coal and Minerals Mining KPIs - 2018 Edition
Top 25 Banking and Credit KPIs - 2016 Extended Edition Top 25 Oil and Gas KPIs - 2016 Extended Edition
Top 25 Insurance KPIs - 2016 Extended Edition Top 25 Sustainability KPIs - 2018 Edition
Top 25 Investments KPI – 2016 Extended Edition Top 25 Retail KPIs - 2016 Extended Edition
Top 25 Mortgages KPIs - 2018 Edition Top 25 Telecommunications KPIs - 2018 Edition
Top 25 Pension Funds KPIs - 2018 Edition Top 25 Call Center KPIs - 2016 Extended Edition
Top 25 Local Government KPIs - 2016 Extended Edition Top 25 Coaching / Training KPIs - 2018 Edition
Top 25 State Government KPIs - 2016 Extended Edition Top 25 Sport Club Management KPIs - 2018 Edition
Top 25 Healthcare KPIs - 2016 Extended Edition Top 25 Sport Event Organization KPIs - 2018 Edition
Top 25 Emergency Response / Ambulance Services KPIs - 2018 Edition Top 25 Airlines KPIs - 2016 Extended Edition
Top 25 Hospitals KPIs - 2016 Extended Edition Top 25 Land Transport (Road & Rail) KPIs - 2018 Edition
Top 25 Medical Laboratory KPIs - 2018 Edition Top 25 Local Public Transport KPIs - 2018 Edition
Top 25 Medical Practice KPIs - 2018 Edition Top 25 Shipping KPIs - 2018 Edition
Top 25 Preventive Healthcare KPIs - 2018 Edition Top 25 Utilities KPIs - 2016 Extended Edition
Top 25 Restaurant KPIs - 2016 Extended Edition Top 25 Electricity KPIs - 2018 Edition
Top 25 Hotel KPIs - 2016 Extended Edition Top 25 Natural Gas KPIs - 2018 Edition
Top 25 Travel Agency KPIs - 2018 Edition Top 25 Water and Sewage KPIs - 2018 Edition
Top 25 Airports KPIs - 2016 Extended Edition
Access the best-of-breed collection of knowledge

ORDER YOUR COPY
resources by visiting store.kpiinstitute.org/publications.html

APPENDIX B: REFERENCE COLLECTION OF BOOKS
The KPI Dictionary Series
Performance excellence is using the right resources, at the right time. Get your own Dictionary and shape your next
competitive advantage!
 ACCESS
A full collection of KPIs
 EXPLORE
KPI definitions, sub metrics and calculation
formulas
 OPTIMIZE
The KPI selection process
 IMPROVE
Your current KPI framework
 BUILD
Your internal KPI library
FIND THE MOST SUITABLE KPIS TO MEASURE YOUR BUSINESS SUCCESS!
8,000+ Examples of documented Key Performance Indicator Definitions for an in depth

view on Performance Measurement
32 Newly released publications:

 14 Functional Area KPI Dictionaries
 18 Industry KPI Dictionaries
KEY COMPONENTS THAT EACH BOOK ENCOMPASSES:

 Explicit KPI definitions, submetrics and calculation formulas
 Precise KPI terminology explanation
 Comprehensive key performance indicators infographic
 Accurate guidelines on how to use the book
Visit store.kpiinstitute.org/publications.html and get The KPI Dictionary

ORDER YOUR DICTIONARY
specific to your departement or industry
Select the KPI Dictionary that suites your needs!
Dictionaries by Functional Area Dictionaries by Industry
 The Accounting KPI Dictionary  The Agriculture KPI Dictionary

 The Corporate Services KPI Dictionary  The Arts and Culture KPI Dictionary
 The Finance KPI Dictionary  The Construction and Capital Works KPI Dictionary
 The Governance, Compliance and Risk KPI Dictionary  The Customs KPI Dictionary
 The Health, Safety, Security and Environment KPI  The Education and Training KPI Dictionary
Dictionary  The Financial Institutions KPI Dictionary
 The Human Resources KPI Dictionary  The Healthcare KPI Dictionary
 The Information Technology KPI Dictionary  The Hospitality and Tourism KPI Dictionary
 The Knowledge and Innovation KPI Dictionary  The Infrastructure Operations KPI Dictionary
 The Marketing and Communications KPI Dictionary  The Local Government KPI Dictionary
 The Online Presence KPI Dictionary  The Media KPI Dictionary
 The Production and Quality Management KPI  The Professional Services KPI Dictionary
Dictionary
 The Real Estate / Property KPI Dictionary
 The Project and Portfolio Management KPI
 The Resources KPI Dictionary
Dictionary
 The Sports KPI Dictionary
 The Sales and Customer Service KPI Dictionary
 The State / Federal Government KPI Dictionary
 The Supply Chain KPI Dictionary
 The Telecommunications KPI Dictionary
 The Transportation KPI Dictionary
 The Utilities KPI Dictionary
You are now one step away from

mastering business excellence
8000 KPIs structured in 2 volumes
THE KPI DICTIONARY VOLUME I:

FUNCTIONAL AREAS
Find out insights about KPIs from 16
Functional areas and 65 subcategories
THE KPI DICTIONARY VOLUME II:

INDUSTRIES
Access KPIs from a variety of 25 Industries
and 94 industry specific subcategories
Performance resources are now at your fingertips. Find out more by

ORDER YOUR DICTIONARY
accessing store.kpiinstitute.org/publications.html

APPENDIX C: PERFORMANCE MANAGEMENT TOOLKITS
Get your pre-populated comprehensive selection of tools that enable both planning
and monitoring performance!
KEY BENEFITS
 Integration: a complete set of tools for implementing a Performance Management System
 Hands-on approach: a ready-to-use toolkit, containing pre-populated templates
 Advice and learning: all templates are filled in with relevant data, requiring limited effort for customization
 Complete documentation: all KPIs are fully documented
Toolkits by Industry
Managing and measuring performance is now easier with prepopulated templates
Call Center Performance Medical Practice Performance Real Estate Agency Performance Recruitment Agency
Management System Toolkit Management System Toolkit System Toolkit Performance Management
System Toolkit
DISCOVER ALL
TOOLKITS
IN OUR RESEARCH
LIBRARY!
Get your pre-populated comprehensive selection of tools! Visit store.

GET STARTED TODAY
kpiinstitute.org/publications.html
APPENDIX D: PERFORMANCE MAGAZINES
Keeping professionals updated with the latest performance management trends and
developments
DISCOVER THE PERFORMANCE MANAGEMENT SERIES

 Perspectives: interviews with specialists from various countries
 Around the World: countries analyzed for legislation in the field. Special country insights
 Education: reputable universities, university degrees and subjects related to the field
 Trends: the Google search popularity and media exposure of performance related keywords
 Resources: best-selling and latest published books. performance-related academic articles
 Career: Most sought-after careers and salary levels in the field in the specific member states
Special Editions
The Performance Management in 2014 Special Editions are The KPI Institute’s exclusive publications that provide
in-depth analysis on Performance Management within the Gulf Cooperation Council and the Member States of the
Association of Southeast Asian Nations.
GET ACCESS TO
 Portraits of renown performance experts across the globe
 Interviews with prominent professionals in the field
 Articles offering valuable insights on numerous performance related topics
 Reviews of software and hardware solutions
 Resources and other recommendations
THE KPI INSTITUTE’S

MAGAZINE DEDICATED
TO PERFORMANCE,
NOW IN PRINT!
Browse and download magazines from

READ THIS MONTH’S ISSUE
store.kpiinstitute.org/publications.html

APPENDIX E: MEMBERSHIP OPTIONS
MEMBERSHIP OPTIONS
BECOME A MEMBER OF THE KPI INSTITUTE
AND GAIN FIRST-HAND ACCESS TO OUR KNOWLEDGE AND EXPERTISE!
 EDUCATION AND EVENTS  RESEARCH HELPDESK
Get exclusive discounts to our training courses, conferences and forums scheduled Receive guidance from our research team to identify the best resources according to
throughout the entire year across 6 continents. your needs and explore The KPI Institute knowledge platforms.
 NETWORKING  ANALYST CONSULTATION

Join your peers! Get and share valuable insights on performance related subjects Benefit from dedicated advisory support from The KPI Institute’s research
within The KPI Institute Community. analysts. Customized secondary projects can be developed on demand.
Professionals already trust The KPI Institute for their

80,000+ business performance solutions!
$390/year $2,900/year $4,900/year

Event discount: $100 off early bird rate Event discount: $100 off 2 or more 1 full certification course or
participants rate conference of your choice
2 KPI Dictionaries
All KPI Dictionaries All KPI Dictionaries
2 Top KPI Reports
All Top KPI Reports All Top KPI Reports
2 Performance Management Toolkits
All Performance Management All Performance Management
2 Webinars Toolkits Toolkits
Preview to Research studies’ executive All Webinars All Webinars
summaries
All Research studies All research library resources
Online guidance for exploring the TKI available
knowledge platforms Phone guidance on you knowledge
platforms Phone guidance for exploring the
TKI knowledge platforms
8 hours of research analyst support
8 hours of research analst support
8 hours of customized secondary
research 8 hours of customized secondary
research
Get exclusive resources as a member of The KPI Institute! Find out more by
visiting kpiinstitute.org/membership
GO PREMIUM
APPENDIX E: SUBSCRIPTION OPTIONS
Explore the world of KPIs
Whether you want to implement a performance measurement system or you need to improve your current framework,
you can choose the best subscription plan to help you inform your KPI Selection.
GET ACCESS TO SMARTKPIS.COM - The largest database of properly documented KPIs
BENEFITS
 Find relevant KPI examples for your context
 Obtain high quality KPI documentation
 Use the KPI documentation form example to design your own
template
 Export documented KPI examples and instantly create your own
library
 Receive assistance from experts on matters related to performance
measurement
SELECT THE RIGHT PLAN FOR YOU!
PREVIEW EXPLORE STANDARD PREMIUM

$0/year $39/year $99/year $249/year
100 KPI names 200 KPI names viewed 300 KPIs names and 500 documented KPIs
displayed definitions viewed viewed
Basic access to KPI Basic Detailed Premium

Dashboard documentation level documentation level documentation
access access level access
100 KPI names
200 KPI names 300 documented 500 fully documented
Access to the Top
KPIs - 13 fields KPIs - 24 fields
10 KPIs Access to the Top 10
KPIs Report series Access to the Top Access to the Top
10 and Top 20 KPIs 10 and Top 20 KPIs
Report series Report series
1 Top 25 KPIs
Report at your
choice
Access smartkpis.kpiinstitute.org/pricing and get a glimpse of how your

SUBSCRIBE TODAY
exported KPIs will look like!

APPENDIX G: THE KPI INSTITUTE TRAINING PROGRAMS
Certification Courses
Scheduled Courses in 2016
Find out more at kpiinstitute.org/certification VIEW SCHEDULED COURSES
THE KPI INSTITUTE OFFERS A VARIETY OF CUTTING-EDGE TRAINING PROGRAMS TO MEET YOUR NEEDS
Non-certification Courses
Discover practical solutions, expert-vetted content and tools you can immediately use at the workplace.
 KPI FRAMEWORK
These courses focus on the mastery of a higher performance by deploying the best KPI measurement techniques
and performance improvement initiatives.
 KPI BY INDUSTRIES
Focused on a comprehensive approach to successfully implement a KPI Performance Management Architecture
for certain industries.
 KPI BY FUNCTIONAL AREA

Interactive experience to achieve outstanding results through a performance measurement framework adapted
to particular functional areas.
 BALANCED SCORECARD
These courses are focused on attaining the desired state of organizational evolution by structuring the Balanced
Scorecard implementation process.
 STRATEGY AND PERFORMANCE

Focused on emphasising a roadmap to long-term organizational performance, offering key concepts and clear
foundations for achieving business objectives.
 PERFORMANCE THROUGH PEOPLE

Extensive courses that offer strategic solutions for employee engagement, change management, succession
programs and talent management processes.
 SYSTEMS THINKING BUSINESS SIMULATIONS

These courses provide key tools and valuable insights on process improvement, reengineering and cross-
functional team performance.
 PROCUREMENT AND LOGISTICS

Focused on improving your skills in implementing procurement and logistics based strategies, by expanding your
toolkit of practical procurement tools and techniques.
Fitting the training programs to your needs

All courses can be delivered in-house for groups of people in your organisation. If you’d like to speak to one of our
advisors about your in-house training and development requirements, please call +61 3 9028 2223 or email us at
[email protected].
Browse programs that focus on the subjects you want to master by visiting EXPLORE TRAINING
store.kpiinstitute.org/training-catalogue PROGRAMS

APPENDIX H: SKILLS ACADEMY
A C A D E M Y
IMPROVED SKILLS
IMPROVED PERFORMANCE
We support professionals and organisations with business skills development

through hands-on public and in-house training courses
TKI Skills Academy offers progressive training programs and our proprietory eLearning platform, participants to our
focused on enhancing personal and professional growth. courses receive more than a simple classroom based course.
Our courses, developed within global standards, are adapted All our courses combine classroom and online delivery.
to the market’s needs and professionals’ actual learning More importanly, all course participants are assessed at the
expectations. beginning and at the end of each course, their learning being
evaluated and validated through a certification credential.
We created the Academy to help organisations reach peak
performance through better skilled professionals operating We are always open to establishing partnerships with key
more mature organisational capabiltiies. Skills and overall institutions belonging to the vocational education area
business acumen such as effective communication, data in order to expand upon strategies that better fit market
analysis, emotional intelligence, risk management, and needs. This contributes to skills development as we
innovation are a proven ingredients of professional and generate research studies and reports, as well as encourages
organisational success. entrepreneurship initiatives.
We offer a multitude of educational tools and techniques to By using education as an outstanding tool for continuous
maximise learning outcomes. From case studies, exercises, development, TKI Skills Academy forms the leading authority
toolkits, reading bricks and video content, to online databases on vocational education and training systems.
TKI SKILLS ACADEMY STATISTICS
85,000+ 2,400+ 37 29
Members in our Client organizations Industries we work across Countries where we
online communities delivered trainings

Unique value features
PRACTICAL
Emphasis on applicability, enabling
participants to use newly developed skills
EVALUATED immediately
At the end of each course participants’ “The training course was amazing and it enabled
learning is evaluated through a test me to understand the topics from both the
“The difference between this training and others is theoretical and practical point of view.”
the focus on gaining new skills. During the entire
Senior Project Manager, Ministry of Commerce
process, you must prove that you can apply the
and Industry, Riyadh
knowledge gained.”
Scorecard Manager, Al-Kifah Holding, Dammam

VALIDATED
Course content validated by the
BLENDED corresponding industry/functional area
Pre, core and after-course learning stages advisory council
combining online and classroom delivery “The content of this training was up-to-date and
relevant to develop my skills. I cannot wait to
“This integrated training course provided us with
return to my office and implement the knowledge
guidance at all steps. The pre, core and past course
I gained.”
assignments encouraged us to improve our skills.”
Director of HR, University of Business &
Performance Specialist, Capital Markets
Technology, Jeddah
Authority, Kuwait
PERSONALISED UPDATED
Up-to date content, combining both time
Content is customized according to the
tested concepts and emerging trend
participant’s profile (industry, functional
area and country) “The content of the course was rich and up-to-
date! I’d like to take this opportunity to thank the
“The courses are worth the investment because
entire team and look forward to work with you
they are customized to the participant`s needs
soon.”
and they include examples from the industry of
interest.” Performance Analyst, Qatar International
Petroleum, Doha
Senior Instructor, Saudi Civil Aviation Academy,
Jeddah
BENCHMARKED
EXPERIENTIAL Instructional design and delivery
Participants engage actively in case aligned with the Association for Talent
studies, exercises and discussions Development’s (ATD) best practices
“The experience of being involved in each session “Excellent job of developing the courses framework
was a great way of interacting with our peers. in a very detailed fashion, which reflect the best
I felt a lot of energy and enthusiasm during the practices in the field. I look forward to adopt this
exercises.” knowledge in my organization.”
Supply Chain Manager, Yamama Cement, Riyadh Founder and CEO, MILE, KSA

APPENDIX I: ADVISORY SERVICES
Our data-based advisory services focus on our customers’ most challenging issues
SEIZE OPPORTUNITIES. ACCELERATE BUSINESS PERFORMANCE. EXPLORE SOLUTIONS
Strategy and Business Planning Maturity Benchmarking

Model
 Strategy and Business Planning Workshops  Benchmarking Studies Development

 Strategy Audit  Secondary Research Benchmarking Surveys
Performance Measurement Performance Improvement
 Performance Measurement System Implementation  Organizational Processes Mapping

 KPIs Advice  Performance Improvement Workshops
 KPIs Selection Facilitation  Performance Reporting
 KPIs Documentation Assistance  Projects Performance Improvement
 Target Setting Workshops  Portfolio Scorecard and Portfolio Dashboard
Development
 Data Gathering Workshops
Balanced Scorecard Data Visualization
 Balanced Scorecard Implementation  Data Visualization Standards Deployment

 BSC Workshops  Data Visualization Workshops
Should you be interested in benefiting from one of our Advisory Services

CONTACT US TODAY
email us at [email protected] and our analysts will contact you.

Employee Performance Supplier Performance
 Individual Performance Management System  Supplier Performance System Implementation

 Organizational Culture Assessment  Supplier Performance Workshops
 Employee Engagement Program Implementations  Alliance Scorecards Development
 Reward Systems Implementation  Supply Chain Workshop
Data Analysis Innovation Performance
 Data Analysis Framework Implementation  Internal Innovation Framework Development

 Data Analysis off-site Support  Innovation Research
 Data Analysis Workshops  Research Studies on Innovation Practices
Customer Service Performance Personal Performance
 Performance Management System Implementation  Personal Performance Essentials

 Customer Service KPIs Selection
 Customer Service Workshops
 Customer Service Performance Reporting
 Mystery Client Services
OUR APPROACH
The KPI Institute has been

researching performance
measurement for more than 10
years and has developed not only
the most comprehensive database
of KPI examples, but also its own
KPI Management Framework.
Should you be interested in benefiting from one of our Advisory Services

CONTACT US TODAY
email us at [email protected] and our analysts will contact you.

APPENDIX J: AUDIT
GPAUnit.org
performance management capability:
performance management systems
of their performance management system

APPENDIX K: SOFTWARE
Business Intelligence Software
Quickscore is an easy to use, web-based balanced scorecard automation solution that allows an organization to quickly
see results from their balanced scorecard investment.
CHARACTERISTICS
 Software specialized in organizational

performance measurement
 Intuitive, robust, fully live and interactive
 Reliable in any economic environment
 Offers optimal return on investment
BENEFITS
 Real time access to data

 Information and business intelligence
 Enabled decision-making
 Visualization, alignment and integration
CONFIGURATION
 Simple and intuitive data import

 Data mapping via drag and drop
 Data automation
 Real-time monitoring
LIVE DEMO TEST BUY
Choose the perfect tool for measuring performance in your organization and get a free 30 days trial. Order the software
package that most suits you, in terms of price and requirements.
For more information visit http://smartkpis.kpiinstitute.org/software

APPENDIX L: GLOSSARY OF TERMS
The following list provides an explanation of several focusses on the key processes the organization must
popular terms related to KPIs: excel at, in order to provide added value for customers,
and ultimately, shareholders.
Analytics - The process used to discover meaningful
patterns in data. It supports better decision making. Key Performance Indicator (KPI) - A measurable
expression for the achievement of a desired level of results
Best practice - A method that proved to achieve superior
in an area relevant to the evaluated entity’s activity.
results than the ones obtained with other means. Being
that effective, it is generally used as a benchmark. KPI documentation form - A template that structures
relevant information regarding a KPI. The most important
Customer Perspective - One of the four perspectives
fields of a documentation form are the KPI name,
used with the Balanced Scorecard that should bring
Definition, Calculation formula and Target.
visibility into who are the target customers and what is
the value proposition in serving them. Metric - A generic term referring to everything that
can be measured around us, such as: # Air temperature,
Dashboard - In performance management, a dashboard is
# River depth or # Employee’s average height. When
a performance management tool used for monitoring data
metrics reflect the achievement of a desired state they
on a daily basis. It is characterized by visual representations
become KPIs.
of data that enable fast and easy understanding of the
performance status. Objective - A precise statement of what an organization
wants to achieve.
Data capture period - Period for which the results of the
performance indicator have been measured. Scorecard - A performance management tool used to
illustrate performance results and the progress against
Data custodian - The person responsible for providing
established targets. It consists of a collection of KPIs
data in regards to measuring and monitoring KPIs.
correlated with the company’s strategic objectives.
Data reporting - The process of compiling and
Standard reporting frequency - A regular frequency of
communicating performance results.
data reporting for a performance indicator.
Data visualization - Refers to the visual representation
Target - Reflects the desired level to be achieved for a key
of data, in order to better illustrate performance results.
performance indicator, providing meaning to measurement
Documenting KPIs - The process of structuring the results and feedback regarding performance.
most relevant information regarding a KPI, to ensure
Taxonomy - A classification of structures, ordered in a
a standardized approach in working with KPIs and
system, which indicates natural relationships; distribution
facilitating their measurement and analysis of results.
into arranged groups or categories.
Effectiveness - The extent to which objectives are
Traffic Light Colors - Refers to using color signals to
achieved and targets are met, plans are realized, without
visualize the difference between the current situation
considering the resources involved.
and the desired results. Red means that actual results are
Efficiency - The comparison of what is actually produced below targets, yellow is used to express an acceptable
(outputs) with the resources consumed, such as money, deviation from target, while green is used when the
time, labor (inputs). Efficiency takes place when the same desired results were met.
volume of outputs can be produced with less inputs.
Trend - A pattern of continuous change in a condition,
Learning and Growth Perspective - One of the four process or output, or an average or general tendency of a
perspectives used by the Balanced Scorecard that series of data points moving in a fixed direction over time,
monitors human capital, information capital and the which is represented by a line or curve on a graph.
organizational climate.
Financial Perspective - One of the four perspectives used
by the Balanced Scorecard, that informs an organization
whether strategy implementation is leading to improved
financial results.
Internal Process Perspective - One of the four
perspectives used with the Balanced Scorecard that

The KPI Institute is a research institute specialized in business performance. It operates research programs
in 12 practice domains ranging from strategy and KPIs to employee performance and from customer service
to innovation performance. Insights are disseminated through a variety of publications, subscriptions services
and through a knowledge platform available to registered members. Support in deploying these insights in
practice is offered globally through training and advisory services. It manages smartKPIs.com, the result of a
research program dedicated to documenting and cataloguing how KPIs are used in practice. It is an online
portal containing the largest collection of well documented KPI examples, with over 21,100 examples from
16 Functional Areas and 25 Industries. Over the last 14 years, the KPI Institute has assisted over 80,000
organizations in finding solutions to their KPI needs. First published in 2011, the Top KPI Reports have now
reached their fourth and improved edition. The novelty in the new Top KPI reports is an unprecedented
design of the KPI Documentation form, as well as, an enriched content of KPIs which can invaluably assist the
measurement process of organizations worldwide.
Is an on-line platform dedicated to performance measurement. It contains more than 21,100 KPI examples, with
over 8,000 being either published or premium documented. The smartKPIs.com platform joins together examples
of KPIs which are specific to the business environment whether at industry or functional area level. A wide range
of KPIs found on the platform are of interest at global level, such as macroeconomic indicators, social and health
indicators or environment and sustainability related KPIs. Other examples of KPIs can be used by individuals to
track productivity, time management, life-work balance, health and budget management.
HUNDREDS OF RESOURCES,
ONLY ONE CLICK AWAY
The KPI Institute’s Research library is the meeting platform of all
professionals interested in accessing first-hand performance
related research, from 12 practice domains!
This section highlights the most notable Performance

Measurement resources available in our Research library.
Research studies Dictionaries
Books Reports
The Top KPIs series of research reports contains a selection of

the most visited KPI examples on smartKPIs.com. Each report
contains KPI examples, inclusive of 26 fields that are fully
documented with organizational specific data. The reports are
available in both electronic and paper format.

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TOP 25

COST ANALYSIS KPIs

Publication date: - September 2018

An appropriate citation for this report is:

Top 25 Cost Analysis KPIs - 2018 Edition Page 3

How to Use This Report 6

About The KPI Institute 10

smartKPIs.com Community Profile 12

2018 smartKPIs.com Functional Areas Taxonomy 14

2018 smartKPIs.com Industries Taxonomy 15

About Key Performance Indicators (KPIs) 18

Advice on KPI Selection 20

KPI Documentation Guidelines 22

Target Setting: From Theory to Practice 24

Data Gathering Dimensions 26

Enhancing Performance Data Through Visualization 28

Cost Analysis Functional Area 34

Top 25 Cost Analysis KPIs of 2016-2018 35

Template description: page1 36

Template description: page2 38

$ Working capital per employee 40

% Cost of the finance function from revenue 42

$ Cost of goods sold (COGS) 44

% Obsolescence costs from total inventory 46

% Gross profit margin 48

$ Payroll tax paid by the employer 52

% Contribution margin ratio 56

% Overhead cost ratio 58

# Cost improvement plans 60

$ Life cycle cost (LCC) 66

# Sales to general and administrative expenses 68

$ Cost accrual ratio 72

$ Total acquisition cost (TAC) 76

% Wages cost from sales 78

$ Fixed cost per employee 80

$ Costs per FTE employee 86

% Cost with employees from the operating revenue 88

Appendix A: Related Reports 90

Appendix B: Reference Collection of Books 92

Appendix C: Performance Management Toolkits 94

Appendix D: Performance Magazine 95

Appendix G: Training Courses 98

Appendix H: Skills Academy 100

Appendix I: Advisory Services 102

Appendix J: Audit 104

Appendix K: Software 106

Appendix L: Glossary of Terms 108

Top 25 Cost Analysis KPIs - 2018 Edition Page 5

Top 25 Cost Analysis KPIs - 2018 Edition Page 7

Value added by Top KPIs Reports to practice

REPORT PURPOSE RESULT

Top 5 Cost Analysis KPIs of 2016-2018

$ Costs of goods sold (CDGS) 232

% Operating costs 225

% Obsolescence costs from total 200