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Differences between KPI and performance objectives


I was asked to re-design our performance appraisal form as most our employees fill in the same information for KPI and performance objectives. I did some research over the internet and books, and found that:

KPI are quantifiable performance measurements used to define success factors and measure progress toward the achievement of business goals. Whereas,

Objective is a concise statement describing the specific things an organization must do well in order to execute its strategy.

And, KPI = Objective + Measurement + Initiative

But I also found that KPI is part of the objective.... I'm so confused.

Anybody please help explain...

Thanks a lot

Alice Ma

2 Responses

  1. KPIs indicate the achievement , or not, of objectives.
    Personal performance objectives should define what an employee hopes to achieve during the coming term of employment. This should be agreed with a line manager in order to ensure that it contributes to the business goals and strategy of the company. It should also fit in with the empoyee’s job description or a job description of a position they are working towards (this may indeed be the objective). So this is your concise statment describing specific things to be done.

    The KPI is a realtime measurement telling you where the employee is in terms of achieving that objective. i.e How close they are to completing the objective. If, for example, the objective was to complete a project, they should also specify key steps or milestones. The KPI would indicate whether each milestone had been reached in the agreed time.

    Your first formula states that KPI = Objective + Measurement + Initiative. Well you can measure anything you like but a measurement specific to the objective = KPI. If your employees are all filling out the same thing on their forms this suggests the Initiative is missing from a good quality Objective.

    I hope this helps…

  2. the two work together
    In my mind the two dovetail in to each other. A KPI is a target that the business wants to achieve and will measure itself against over the coming year. A performance objective is about how you will measure an individuals contribution to that KPI. So for example, lets say you were working in a local government environment and you had a KPI to cut waste by 10%. That would be the business target but the objective for the individual would be something along the lines of –

    to cut waste by 10% through –

    ensuring effective use of resources

    Adhereing to the green principles of the organisation

    etc etc

    So what you are doing in the objective is carving up the KPI and measuring individual performance against it.

    The easiest way to integrate them into your PM system if you use SMART objectives is to number the KPIs and then have a box before the SMART objective where the person fills in the number of the KPI that objective relates to


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