KPIs vs. CSFs
Key performance indicators (KPIs) are often confused with critical for success factors (CSFs), as these two concepts are tightly connected. Used interchangeably these terms may cause confusion, as in reality they express different things. The main difference between a KPI and a CSF is that performance indicators reflect the level of success, while CSFs point out the cause of success. Key performance indicators are performance management instruments used to measure and monitor the achievement of objectives, so as to determine the level of success of your actions. Critical for success factors are actions that are important in order to achieve an objective.
When managers determine objectives they also consider the necessary actions to support the fulfillment of the goals set. The KPI is what makes an objective quantifiable and the only way to reach your targets is by identifying the factors that influence your objective.
For example, let’s assume that a person’s objective is to lose 10 kilograms. In this case, the KPI to monitor could be # Weight lost per month, while the CSFs to consider may be daily exercises and to adopt a special diet. An objective can have more KPIs and more CSFs, not just one.
Critical for success factors can be from the internal environment of the company, but also from the external business environment where the company’s management has no control over the course of events.
The way objectives, KPIs and CSFs are connected and aligned in a company is the real secret of success, as all these instruments must be integrated into the company’s management strategy.
- Caralli, R. A. (2004), The Critical Success Factor Method: Establishing a foundation for Enterprise Security Management
- Productiveflourishing.com (2012), The difference between Critical Success Factors and Key Performance Indicators