What is a key result indicator (KRI) and how do you influence it?

What is a KRI?

In addition to (key) performance indicators, financial indicators and process indicators, you can measure with key result indicators (KRIs). A KRI is the end result of a great many activities and efforts across the whole organization. The scores on the most important KRIs reflect the ups and downs of an organization. A definition:

A key result indicator indicates, on one important aspect, whether the organization (and its management) is functioning well.

It is crucial that the management of a company and the shop floor understand in which ways the score on a KRI can be influenced and improved.

The 4 most important KRIs of every organization

Every organization has only four KRIs. Although they are defined differently, they are always the same four. You can read the total functioning of any organization from them:

1. Customer satisfaction: how satisfied are your customers with doing business with you? Often measured with customer satisfaction surveys, the number of complaints and returns.
2. Profitability: what is the financial health of your organization? Usually calculated by deducting total expenditure from total income. For companies, EBITDA is an important yardstick: earnings before interest, taxes, depreciation and amortization.
3. Employee satisfaction: how satisfied are your employees with working for your organization? Measured, among other things, by staff turnover and employee satisfaction surveys.
4. Corporate social responsibility (CSR): to what extent does your organization take its social responsibility, with an eye for the environment, minorities in society and humanity in general?

One thing is certain: you cannot turn a knob that directly increases profitability or the satisfaction of customers or employees. So you have to look at how you can influence the scores on the KRIs.

The KRI versus the KPI

Result and cause side by side.

Influencing the key result indicators effectively

How can you influence the four result areas effectively? What is the engine behind your end results, and what is under the hood? Under the hood of the organization are the key performance indicators (KPIs). They show directly how your engine performs, where it falters and where you could improve it further, so that the score on all your KRIs can increase at the same time.

The crux of higher profit or more satisfied customers lies in jointly discussing, understanding and improving the scores on the KPIs that have a great impact on the KRIs. From top to bottom and from left to right in the organization. Everyone must get a very good understanding of how the money is earned and spent, how the revenue model works and how all activities hang together to get satisfied customers and employees. The PDCA cycle is the way to steer that continuous improvement process.

Further reading

• Key performance indicators: the four types and the KPI tree.
• Performance indicators.
• Financial indicators and their limits.
• The balanced scorecard: coherence between results and drivers.

About the author

Jan Bond is a finance professional with broad experience in strategy, improvement programs, data-driven working, performance management and KPIs. He works as an interim CFO, interim controller and program manager for data-driven working, and as a strategic adviser to management teams.

About Diamond Decisions

Diamond Decisions helps organizations become better by enabling better decisions. We don’t start with data, dashboards or AI, but with the decision that needs to improve, and work back from there to KPIs, data and technology. We do that in four steps: inspiration and alignment, business modeling, analytics and data platform and data-driven decision makers. That way BI and AI don’t remain an IT project, but deliver value every day.