According to Parmenter (2011, p. 13), Key Performance Indicators (KPI) are a set of measures that assess the organisation performance on how effective the organisation achieve its objectives which are crucial for current and future success of the organisation. Key Performance Indicators (KPI) has been widely used by many organisations and for organisations to identify the right KPIs; it has to have a clear objectives and strategic directions that align with KPIs set.
For Key Performance Indicators (KPI) to be successful, it needs to have the following characteristics:
• Specific and concise - This emphasized that KPIs has to be clear and focused in order to avoid any misinterpretation occurring.
• Ambitious (achievable yet challenging) - It requires the targets that are observable, achievable, reasonable credible enough under expected conditions as well as independently validated.
• Related to organisation goals – KPI’s needs to align with the organisation overall objectives and goals.
• Time framed - It needs to demonstrate that action has to be achieved within the given timeframe.
• Traceable, or easily monitored - KPIs has to be easily traced out.
• Measurable - It should be quantified and may be either in quantitative or qualitative.
• Realistic - It has to fit into the organisation’s constraints and cost effective.
Benefit of Key Performance Indicators (KPI) for airline industry
Parmenter (2011, p. 14) identified the early adaptation of Key Performance Indicators (KPI) for airline industry happen in 1980’s where British Airways (BA) senior official concentrate on using KPIs to reduce the flight delay. As the managers of British Airways adapt KPIs, the delay significantly reduced and they ...
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...s to increase its sales, the management can increase the number of sales calls. The number of sales calls would be the key performance drivers (KPD). However if the management goal is to reduce cost, the key performance drivers (KPD) would be reduce time spent on each sales call.
• Another example of Key Performance Drivers (KPD) explain by Harbour (2013, p. 139) in professional sport such as football if the goals are to increase number of winning games, the key performance drivers (KPD) would be the way of improving on-field performance.
From the example above, it is clearly identify that KPDs is the drivers for organisation KPIs and furthermore as it was clearly identified earlier by British Airways that KPIs have relevant perspectives with balance scorecard (BSC), it is hypothetical that Key Performance Drivers (KPD) is also relevant with balance scorecard (BSC).
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