KPIs, strategy & continuous improvement
KPI dictionary template: define every measure once, clearly
Build a KPI dictionary that ends arguments about numbers: the fields to define, a ready template, worked examples and how to govern changes.
A KPI dictionary is a single reference that defines every key performance indicator a company uses: what it measures, how it is calculated, where the data comes from, who owns it and what good looks like. It sounds administrative, but it solves one of the most common management problems in growing Philippine companies: meetings that start with arguments about whose number is right. When every KPI has one agreed definition, reviews can move on to decisions.
Why companies need a KPI dictionary
- Sales computes "revenue" net of returns; finance computes it net of returns and discounts. Both numbers appear in the same meeting.
- "On-time delivery" means delivered on the promised date for logistics, but on the requested date for customer service.
- A branch manager leaves, and nobody knows how their shrinkage figure was calculated.
- A new KPI system is implemented, and the old spreadsheet formulas turn out to be wrong.
A dictionary fixes these problems once, and makes onboarding new managers much faster.
The fields every KPI definition needs
| Field | What to write | Example |
|---|---|---|
| Name | Short, unique name | On-time in-full (OTIF) |
| Purpose | Why this KPI matters | Measures whether customers receive what they ordered when promised |
| Definition | Plain-language meaning | Orders delivered complete and within the promised window |
| Formula | Exact calculation | Orders delivered on time and in full ÷ total orders delivered |
| Inclusions and exclusions | Edge cases | Excludes orders rescheduled at the customer's request |
| Unit | Percentage, peso, days, count | Percentage |
| Data source | System and report | Delivery records in the warehouse system |
| Frequency | How often it is updated | Weekly |
| Owner | Accountable role | Logistics manager |
| Updated by | Who records the reading | Logistics analyst |
| Target | The goal | 95% |
| Thresholds | Green, amber, red | Green ≥ 95%, amber 90–94.9%, red below 90% |
| Direction | Higher or lower is better | Higher is better |
| Related KPIs | Drivers and outcomes | Picking accuracy, fill rate, customer complaints |
| Review forum | Where it is discussed | Weekly operations review |
Worked examples
Inventory record accuracy
- Formula: items counted with no variance beyond tolerance ÷ items counted
- Inclusions: cycle counts and full counts; tolerance zero for high-value items, 2% for others
- Owner: warehouse head; frequency: monthly; target: 97%
Payroll accuracy
- Formula: payroll cutoffs released without post-release corrections ÷ total cutoffs
- Exclusions: corrections caused by approvals submitted after the cutoff deadline
- Owner: payroll lead; frequency: per cutoff; target: 100%
Month-end close days
- Formula: working days from period end to management reports issued
- Owner: controller; frequency: monthly; target: 6 days; lower is better
How to build the dictionary
- List the KPIs already used in management reports, scorecards and bonus schemes. Expect duplicates.
- Merge duplicates and pick one name for each measure.
- Interview owners to capture the real formula and data source, including edge cases.
- Test the formula by recomputing the last three periods and comparing with reported numbers.
- Get sign-off from the owner and finance for any KPI used in incentives.
- Publish the dictionary where managers can find it, and link each scorecard measure to its definition.
Governing changes
Definitions change: a new product line, a new branch format, a new system. Uncontrolled changes break trends and trust. Keep a simple change process:
- Changes proposed by the owner, with the reason
- Approved by the executive sponsor or finance for KPIs in incentives
- Effective date recorded, and prior periods restated or marked as not comparable
- Version history kept in the dictionary
Common mistakes
- Definitions written by analysts without the owner's agreement
- Formulas that depend on a spreadsheet only one person understands
- No exclusions written down, so every exception becomes a debate
- Too many KPIs; a dictionary of 300 measures is a sign of a different problem (how to set KPI targets, KPI examples by department)
From dictionary to scorecard
A dictionary is most useful when definitions live next to the readings, so every number on a scorecard can be traced to its definition, owner and data source. See balanced scorecards and cascading KPIs.
Where Cirquolus fits
In Cirquolus KPI software, scorecards hold metrics with targets, readings and ownership, and metric details are used in process reviews and improvement follow-up. Use your KPI dictionary to set up scorecards so every measure has a clear definition and owner from day one.
Frequently asked questions
What is a KPI dictionary?
A reference document or system that defines each KPI's purpose, formula, data source, owner, frequency, target and thresholds.
Who should own the KPI dictionary?
Usually a strategy, finance or performance management function maintains it, with each KPI owner responsible for their definitions.
How detailed should KPI definitions be?
Detailed enough that two people computing the KPI from the same data get the same answer, including exclusions and edge cases.
How often should the KPI dictionary be reviewed?
At least annually during planning, and whenever a KPI's definition or data source changes.
Bring this workflow to a Cirquolus demo.
Show us your current process, companies and branches. We will map it to the modules you need and propose a realistic rollout.