Defining KPIs for Municipal Enterprises: International Practices and the Ukrainian Context

On October 27, 2025, EU-LEAP NGO representative Valeriia Hrytsenko participated in an all-Ukrainian workshop dedicated to defining key performance indicators (KPIs) for municipal enterprises - using the example of the EUACI Integrity Bridges program, organized by the Agency for Reconstruction and Development.

In her speech, Valeria Hrytsenko emphasized that when defining KPIs for municipal enterprises, it is worth relying on international approaches, in particular: World Bank reports, OECD Guidelines on Corporate Governance of State-Owned Enterprises (2024) and the OECD report “State-Owned Enterprises and Sustainability” (2025).

Valeriia said that the experience of other countries, presented by the World Bank, demonstrates a number of effective models:

Korea - KPIs are aligned with the strategic goals of the enterprise, their implementation affects the bonuses of managers and the extension of contracts, Austria - KPIs are integrated into agreements with the owner, are verified through annual reporting and audit, have a high level of transparency, Kazakhstan - the system "cascades" KPIs from national strategies to subsidiaries, indicators are public and measurable.

“From this experience, three elements are particularly valuable for Ukraine: the publicity of KPIs, the connection with the motivation system of managers, the inclusion of KPIs in agreements with the owner of the enterprise,” noted Valeriia Hrytsenko.

The updated OECD Guidelines (2024) determine that KPIs should be based on the strategic goals of the enterprise, be measurable and auditable. The new section 7 of the principles focuses on sustainable development: enterprises should manage risks and opportunities, creating long-term value.

The OECD report (2025) emphasizes that setting KPIs helps to: monitor the company's activities, form a constructive dialogue between the owner and management, define indicators of sustainable development and strengthen the trust of stakeholders.

The OECD recommends forming KPIs according to the SMART principle - specific, measurable, achievable, relevant and time-bound.

In the Ukrainian context, these principles are consistent with the State Property Policy, which defines “performance targets” that help assess the company's performance based on financial, non-financial and operational objectives.

The EU-LEAP expert concluded that, based on the analysis of international practices, OECD recommendations and provisions of the State Property Policy, KPIs for municipal enterprises should: be based on the strategic documents of the enterprise and the community development plan, be public, include a system of incentives (rewards, contract extensions), be contained in agreements with the owner, be focused on sustainable development and attracting investments, be formed according to SMART criteria, and partially correlate with performance targets from the “owner’s wish list”.

The EU-LEAP NGO, in cooperation with EUACI, continues to implement the corporate governance reform of municipal enterprises, introducing international standards of accountability, efficiency and integrity at the local level.