Chapter 03 · Reporting & strategyStrategy, Targets & Performance Management
Key performance indicator (KPI)
Definition
A key performance indicator is a selected metric used to track progress against an objective, target or management priority.
References
This reference provides supporting context for how “Key performance indicator (KPI)” is defined and used.
Overview
What it means in practice
Key performance indicator (KPI) should be read as a strategy and performance-management term. Its meaning depends on the objective, boundary, baseline, owner, timeframe and evidence used to assess progress.
In practice, users should connect key performance indicator (KPI) to a specific decision, metric, plan or governance process. That keeps the term concrete enough to guide action and review.
Why it matters
Key performance indicator (KPI) matters because strategy language can shape priorities, budgets, accountability and external claims. Clear wording helps readers see whether the term describes intent, action, measurement or demonstrated performance.
Common misconception
A common error is to use Key performance indicator (KPI) as a label for ambition without showing the scope, metric, owner or review process. That can make progress appear more settled than it is.
Review questions
What objective or decision does the term support? Who owns it? What boundary, metric, evidence and timeframe would let a reviewer judge whether it is working?
How it is used
Boards, executives, reporting teams, auditors and stakeholders use “Key performance indicator (KPI)” in strategy, target-setting, sustainability reporting, performance reviews and external communications. In each case, the user should state the reporting framework, organisational boundary, baseline, timeframe, metric and governance process; otherwise, the same term may be applied to materially different situations.
In this context, it refers to a selected metric used to track progress against an objective, target or management priority.