Guide to key performance indicators: Communicating the measures that matter

June 2006

Narrative business reporting - whether in the form of an Operating and Financial Review (OFR), Management Discussion and Analysis (MD&A), a Business Review or other management commentary - is vital to corporate transparency.

Although specific regulatory requirements for narrative business reporting are evolving, key performance indicators (KPIs), both financial and non-financial, remain an important component of the information needed to explain a company's progress towards its stated goals. But despite this fact, KPIs are not well understood.

What makes a performance indicator "key"? What type of information should be provided for each indicator? And how can it best be presented to provide effective narrative business reporting?

This publication continues our series of practical guides on aspects of transparent corporate reporting. Following on from our recent Guide to forward-looking information, we address the UK legislative requirement for KPIs, as well as providing answers to the questions highlighted above.

In responding to these questions we don't just look at the guidance currently available on the details of narrative reporting and KPIs. Instead, this publication draws on the wealth of expertise that we have gained through several years of research among investors and directors, and through initiatives such as ValueReporting^TM and the Building Public Trust Awards.

We seek to illustrate what good reporting of KPIs looks like and bring to life our suggestions regarding both the content and presentation of KPIs with a collection of good practice examples, drawn from the UK and elsewhere.

These practical examples show how some companies are already making a virtue of reporting the measures that are critical to an understanding of business performance and delivery against their chosen strategy.

Please register at our dedicated OFR site to download a free copy of this guide.