Aligning Key Performance Indicators With Integrated Thinking Principles: Insights From Academic Literature and South African Organisations' Extra‐Financial Reports

The aim of this paper is to identify which principles of integrated thinking can be applied by an organisation to develop holistic key performance indicators (KPIs) and to outline current practices in disclosing KPIs that align more broadly with an integrated thinking logic. To do so, an analysis of the academic literature is performed to identify the core integrated thinking principles that can be used as part of a performance evaluation structure that considers both financial and extra‐financial matters. The identified principles are applied to a sample of South African‐listed entities' extra‐financial reports to illustrate how integrated thinking principles are incorporated into the KPIs being reported. Eight core themes specific to incorporating integrated thinking in KPIs are identified. These include (1) assurance, (2) timeframe, (3) coverage of the Sustainable Development Goals and multi‐capitals, (4) factors influencing the achievement of the metric, (5) stakeholder engagement, (6) materiality, (7) the level of application and (8) post‐implementation reviews. The analysis reveals that KPIs have incorporated more principles of an integrated thinking logic from 2013 to 2021 but that there is room for improvement. To facilitate this, examples of best and worst practices for reporting on KPIs are outlined. The study is among the first to outline formally the coverage of literature on integrated thinking, specifically in the context of performance evaluation and to assess the related performance evaluation disclosures in accordance with integrated thinking principles. The study offers practitioners and academics a framework for evaluating how KPIs can be set and evaluated in the context of integrated thinking.