A KPI is a metric but a metric is not a KPI: the square and rectangle theory.
What are the differences between KPIs (Key Performance Indicators) and Metrics? And more importantly, why does it matter?
The Difference Between KPIs and Metrics
One way to look at this difference would be between your weight (metric), and the amount of weight you’ve lost (KPI). Both are numbers used for a measurement. Or, what is the difference between a raw score of 60 (metric) and how many points you need to get an A in the class (KPI)? Again, both are numbers – but for two very different measurements. Clear as mud, right? Perhaps an analogy will help.
Remember the elementary math rule, “A square is a rectangle, but a rectangle is not a square?” A square fits the definition of a rectangle because it has 4 sides. However, a rectangle cannot then meet the definition of a square, because to be a square you must not only have four sides – the four sides must also be congruent. Well, a KPI is also a metric, but a metric is not a KPI.
A metric is a static number or a measure of something at a point in time. An example of metrics for me would be my age: I am 22 years old; I weigh 120 pounds; I scored an 87; I have $60. These are all very static figures; they do not change themselves. A metric is a rectangle. It has one purpose and measures only one scaled item.
So what about KPIs? KPIs do just that; they indicate performance. Like the square, a KPI is also a metric. It is a measure against something else, but it is more than just a static metric. KPIs measure achievement, growth and success within a process. They work alongside metrics and goals in order to show you what is working, and why.
If I have $100, then that is my static metric of the amount of money I have. Say I need $150. That is my goal. If I make it to $120 dollars the next week, then I am able to track the progress of getting to my goal of $150. I will also be able to see why I gained an extra $20. Did I eat out less? Did I spend less on gas? These are insights – insights into the success of your goals and objectives.
Why is this important?
We don’t want to simply measure our business processes with metrics, we want to manage them with the use of KPIs. While I can measure the amount of money in my wallet every day, unless I manage it – I won’t be able to measure any change or success that occurs. KPIs are the metrics of managing, and managing our business processes leads to successfully operating our business and reaching operational objectives.
This is why we are so excited about the business performance management solution we created at Cohesive Solutions. The Propel Performance Management Solution leverages the use of KPIs to appropriately analyze your business processes to show you what is contributing to the success of your organization’s objectives, and what needs to be managed or re-evaluated. To learn more about how Propel can help your organization, please visit our website at www.cohesivesolutions.com.