In this video tutorial, accounting professor Kay Stice explores the right number of key performance indicators (KPIs) a company should have. He uses the Pareto Principle, or 80/20 Rule, to determine 10 to 20 KPIs are ideal for an organization.
- Can an organization have too many…key performance indicators, or KPIs?…Well, of course it can.…The word key means that the organization has gone through…a selection process to identify a few key measurements…out of the many possible ones that are the most important.…So how many is too many?…Well, in 1956, the year I was born, George Miller,…a professor of psychology at Princeton University…published a paper titled The Magical Number Seven,…Plus or Minus Two:…Some Limits on Our Capacity for Processing Information.…
Well, I like this title,…because it tells you just about everything you need to know…about the results of Professor Miller's research.…The title itself is an embodiment of the idea…of summarizing a complex set of data…into a few key measures, seven, plus or minus two.…Professor Miller's research indicated that the human brain…can store seven items of information in working memory.…A couple more for numerical digits…and a couple less for complete words.…So as we consider the question of whether an organization…
In this course, accounting professors Jim and Kay Stice explain what KPIs your business should consider in a balanced scorecard, from financial goals to employee and customer satisfaction. They describe how to craft a clear mission statement that complements your KPIs, and how to tie performance to incentives. Plus, get a look at KPIs in action, as Jim and Kay break down a case study examining a trucking company's balanced scorecard.
- The importance of KPIs and measuring performance
- Financial goals and measure
- Customer needs and satisfaction
- Employee growth
- Creating an effective mission statement
- Linking measurements and rewards
- Examining a KPI case study