Developing Key Performance Indicators KPIs

Mid level managers can use this as a “thinking” template to help create and realize KPI’s.

What is the raw idea for the KPI’s 

Make notes about what problem you are trying to address with the KPI.

Why are you thinking about developing a KPI ?

Don’t get too detailed.

Details will emerge from the process below.

Just rough thinking here, review later.

 

Generic Steps to achieving KPI’s

 

  1. Review the existing (and maybe informal) KPI
  2. Map the processes and understand them thoroughly 
  3. Explore the existing data and what is already being measured
  4. Identify what process steps have the most affect stakeholder satisfaction
  5. Identify Negatives – what gives the stakeholders  negative feelings – helplessness, voiceless, defrauded, victimised
  6. Identify positives – what makes the stakeholders feel aligned with the company’s vision mission and execution 
  7. Plan how staff executing the process can behave differently to reduce negatives and increase the positives 
  8. Train staff in new behaviours 
  9. Identify how to measure staff execution
  10. Identify how to measure client change indicators 
  11. Do a measured data gap analysis 
  12. Measure what is needed to be measured to fill the data gap
  13. Track KPI over time 

 

Why do we do the things we do – 

Map the process

Use Draw.io and a swim lane diagram to make a flow chart of the process.

Document the process from the flow chart 

Be sure to define the starting triggers and the endpoint(s)

 

Is the process map agreed by all players including clients?

 

Analyse and optimise the process

Are there boundary issues?

Are there delegation issues?

Eliminate obvious redundancies

Try to find opportunities for parallel rather than serial processing

 Identify control points and approval points 

What matters is what’s measured

 

What can be measured 

What is easy to measure 

What measurements are directly indicative of outcomes.

Think about using recognised measurement methods. For instance, 

  • Net Promoter Score (NPS), 
  • Customer Satisfaction (CSAT), 
  • Churn rate, Retention rate, 
  • Customer Lifetime Value (CLV) or 
  • Customer Effort Score (CES)?  

 

First, do no harm

Do not “throw out the baby with the bathwater” or break existign imperfect but working systems in a quest to find “perfect” systems.

What is in place 

 

Is there a proactive (or any) plan ?

 

Is there a planned response to stakeholder  issues ?

 

Is there a record of stakeholder touches?

 

What is foreseen / planned but not implemented 

 

What/who is blocking implementation of the foreseen and planned?

 

Time is of the essence

Where does staff time go?

Is more staff time needed?

Are there efficiencies to be made?

 

Doing the completely impossible with nothing at all – Scalability 

Can more be achieved with fewer resources?.

What can be automated efficiently?

What can be outsourced efficiently?

What ratios are set in concrete?

 

Refine the raw KPI(s) in light of the above.

The purpose of having KPIs is to help deliver good long term company wide results.

 

KPIs always reflect strategic value drivers. Metrics may represent the measurement of any 

business activity. 

Good KPIs possess these characteristics. All metrics may exhibit some of these characteristics, but good KPIs possess all of them.

 

KPIs Reflect company strategy

KPIs reflect and measure key drivers of business value. Value drivers represent activities that,  when executed properly, guarantee future success. Value drivers move the organization in the 

right direction to achieve its stated financial and organizational goals. Examples of value 

drivers might be “high customer satisfaction” or “excellent product quality.”

 

Good KPIs are “leading” not “lagging” indicators of performance. In contrast, most financial metrics (especially those found in monthly or annual reports) are lagging indicators of performance.

 

KPIs Are Defined by “Executives” and refined as they Cascade throughout an Organization 

Every group at every level in every organization is managed by an “executive” whether or not

the person carries that title. These executives may be known as “divisional presidents,”

“managers,” “directors,” or “supervisors,” among other things. Like the CXOs, these 

“executives” also need to conduct strategic planning sessions that identify the key value 

drivers, goals, and plans for the group. At lower levels, these elements may be largely defined 

and handed down by a group higher in the hierarchy. 

However, in every case, each group’s value drivers and KPIs tie back to those at the level

above them, and so on up to the level of the CXOs. In other words, all KPIs are based on, contribute to  and tied to the overarching strategy and value drivers. In this way, top­level KPIs 

cascade throughout an organization, and the data captured by lower­ level KPIs roll up to

Corporate wide KPIs. This linkage among all KPIs, which can be modeled using strategy 

mapping software, supports flexible analysis and reporting at any level of granularity at any 

level of the organization.

KPIs Are Based on Corporate Standards 

The only way cascading KPIs work is if an organization has established standard 

measurements. In some cases, organizations can only agree to disagree and use metadata to

highlight the differences in reports. 

 

KPIs Are Based on Valid Data 

Unfortunately, knowing what to measure and actually measuring it are two different things. Before managers finalize a KPI, they need to ask a technical analyst if the data exists to calculate the metric and whether it’s accurate enough to deliver valid results. Often, the answer is no! In that case, executives need either to allocate funds to capture new data or clean existing dirty data. Or, revise the KPI. 

Providing cost estimates for each approach is necessary for deciding the best course of action.

KPIs Must Be Easy to Comprehend

One problem with most KPIs is that there are too many of them. As a result, they lose their power to grab the attention of employees and modify behavior. A usual number of KPIs that organizations deploy per user is seven. # would be better. More KPIs than this makes it difficult for employees to peruse them all and take requisite action. 

KPIs must be understandable. Employees must know what’s being measured, how it’s being calculated, and, more importantly, what they should do (and shouldn’t do) to positively affect the KPI. 

KPIs Are Always Relevant 

To ensure that KPIs continually boost performance, you need to periodically audit the KPIs to determine usage and relevance. If a KPI isn’t being looked at, it should probably be discarded or rewritten. In most cases, KPIs have a natural lifecycle. When first introduced, the KPI energizes the workforce and performance improves. Over time, KPIs lose their impact and should probably be revised. Review and revise KPIs quarterly.

KPIs Provide Context 

Metrics always show a number that reflects performance. But a KPI puts that performance in context. It evaluates the performance according to expectations. The context is provided using  thresholds, benchmarks and targets.

KPIs Empower Users

You can’t manage what you don’t measure. It’s important not to link incentives to KPIs until the KPIs have been fully vetted. Often, KPIs must be tweaked or modified before they have the desired effect. 

It’s also critical to revamp business processes when implementing KPIs. The business process 

needs to empower users to take the appropriate action in response to KPIs. The last thing you

want is informed but powerless users. That’s a recipe for disillusionment and poor morale.

KPIs Lead to Positive Action 

KPIs should generate the intended action—improved performance. KPIs must work across the whole organisation and not undermine or dump work across divisional boundaries. Human nature suggests people will always try to circumvent KPIs and find loopholes to minimize their effort and maximize their performance and rewards. Good KPIs are vetted before deployed and closely monitored to ensure they engender the intended consequences.

 

 

 

Back up notes

 

Use SMART Goals wherever possable

  1. Is your objective Specific?
  2. Can you Measure progress towards that goal?
  3. Is the goal realistically Attainable?
  4. How Relevant is the goal to your organization?
  5. What is the Time-frame for achieving this goal?

Watch Simon Sineks “Why and How” video

https://youtu.be/IPYeCltXpxw

Develop dashboards for KPIs

Remember some  KPI dashboards only describe existing or past phenomena, and miss being able to predict future events based on past data and then prescribe a course of action.

Dashboards show you where you have been and need analysis and thought to show you where you are going.

 

 

 

Why a Wayne Bucklar website

I find that I have many interests and those which have been commercialised have their own websites and generally are under the umbrella of Vertical Internet Media Limited and can be accessed through http://verticalinternetmedia.com/.

.However, I have broad interests that change over time and I wanted a forum to express what was taking may attention at present.  Storytelling, aging, outsourcing, the digital media and  marketing have all got my attention and you can expect them to occupy pages here in the future.