Reasons for measuring performance

Organizations measure performance for three main reasons:

  1. Learn and improve performance
  2. Provide external reporting (for shareholders and compliance requirements)
  3. Monitor and control internally within the organization

Only what gets measured gets done. Unless something is measured, it cannot be managed and controlled

Measure: Is a unit or standard of measurement, which consists of a number and a unit.

Metric: Is used in business performance and has a goal or performance associated with it.

KPI: Type of measurement used to gauge or compare performance. Metric that is tied to a target.


  • Are used extensively, especially to learn and improve.
  • Provide information to users for making informed and, hence, better decisions so that performance can be improved
  • KPIs are routinely used to monitor and control performance and behavior of employees at all levels of the corporate hierarchy.
  • KPIs are used to set performance goals and monitored to ensure that they have been met.
  • Objective of using a KPI is to determine if the performance is on or off target.
Last modified: July 5, 2019



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