Every user can be assigned a User Profile corresponding the the area of work. These profiles are used primarily when defining KPI rules as the required KPI rules depend heavily on the user's area of work.
Here we see 3 profiles created: Sales, Sales Management and Consultancy. You may add profiles using the button Add.
It is not mandatory to have profiles for any user in your organization. But users you will want to present KPIs will need a profile.