A KPI is commonly defined as a measurable expression of performance in an area relevant to the evaluated entity’s activity. “Entity” is the most inclusive and correct term because KPI systems can be applied at multiple levels and units: an organization, a department, a team, an individual, a facility, a program, or even a supplier relationship—each can be an “entity” being evaluated. Using “company” or “organization” narrows the scope unnecessarily, and “team” is too specific. This definition supports cascading: the same KPI principles apply whether you’re evaluating the whole enterprise (strategic outcomes), a department (operational performance), or an individual (role-relevant contribution). It also reinforces proper design: KPIs must align to the entity’s objectives, be controllable where possible, and be supported by reliable data. A common pitfall is selecting KPIs that do not match the evaluated entity’s sphere of influence, leading to frustration and disengagement. Using “entity” in the definition emphasizes that KPI design must be tailored to context and accountability.