itsual KPI and Metrics (Finance)
Overview
KPIs focus attention. Finance helps ensure metrics are well-defined, consistently calculated, and aligned with value creation rather than vanity or gaming.
When to Use
- Building management scorecards
- Aligning board and leadership metrics
- Cleaning conflicting metric definitions
- Linking operational metrics to financial outcomes
Core Practices
- Define each metric with formula, source, owner, and cadence
- Prefer leading and lagging indicators as a pair
- Limit the set; more metrics dilute focus
- Audit calculations when systems or teams diverge
- Review whether metrics still match strategy
Principles
- What gets measured gets managed — for better or worse
- Definitions must survive org-chart changes
- Goodhart’s law: metrics under pressure become targets that distort
- Finance owns integrity of financial metrics
Verification
- Critical metrics have written definitions
- Sources and owners are clear
- Scorecards drive decisions, not only reporting