Key Performance Indicators

KPIs evaluate the success of an organization or a particular activity such as projects, programs, products and other initiatives.

Measure Company's Performance

They might not have a monetary value but they do contribute to the compa− ny’s profitability. ‘You cannot manage what you cannot measure’. (Anon) Performance measurement plays an important role in:

  • Identifying and tracking progress against organizational goals
  • Identifying opportunities for improvement
  • Comparing performance against both internal and external standards

Individual KPIs

“What gets measured gets done” is a common management saying. If you set a goal around a desired outcome, the chances of that outcome occurring are much higher, simply because you have committed to managing and measur− ing your progress toward it. When you set goals and KPIs with individual team members, make sure that they align with your team’s overall strategy which, in turn, aligns with the overall strategy of your organization. Defining an employee’s goal with an organizational KPI ensures that their dai− ly activities are well aligned with the goals of the organization. This is the critical link between employee performance and organizational success. 

SMART KPIs:

  • Specific: be clear about what each KPI will measure, and why it’s important.
  • Measurable: the KPI must be measurable to a defined
  • Achievable: you must be able to deliver on the
  • Relevant: your KPI must measure something that matters and improves
  • Time-Bound: it’s achievable within an agreed time frame

PLAN OF ACTION

Using KPIs for Recognition and Development

When you are satisfied that you have meaningful KPIs to measure the performance of your team, and of your organization as a whole, make sure that the appropriate training, support and incentives are in place to enable your people to perform well. Remember: what gets measured, gets done. But what gets rewarded gets done, too! When you establish your rewards and recognition practices, make sure that they relate directly to the KPIs you’ve set, and that you’re not rewarding potentially counterproductive behaviors. For example, if you want to measure people on how well they deal with customer complaints, then reward− ing them for reducing the number of complaints confuses the message you’re trying to send. Intuitively, you may feel that the fewer complaints you receive, the better your customer service must be. But this is not necessarily true: you may be getting fewer complaints because you have fewer customers, or because your customers can’t access your support services.Conversely, if your organization wants to attract new customers, then you might have a KPI that measures how many new customers you gain each week. Depending on the situation, a well-aligned performance system may reward employees based on the number of new customers they personally help to attract

Key Benefits

  • Set a clear overview on the progress of the business
  • Improve your business results through a better objective alignment in each department, more relevant, clearly defined and precise data to support the decision making process
  • Inform the key stakeholders in order to fully develop the internal performance management capability
  • Build the foundation for the performance management
  • Ensure customer requirements have been met
  • Set sensible objectives and comply with them
  • Provide standards for establishing comparisons
  • Provide visibility and a “scoreboard” for people to monitor their own performance level
  • Highlight quality problems and determine areas for priority attention
  • Provide feedback for driving the improvement effort

Business Applications

  • Marketing and sales
  • Operations
  • Manufacturing
  • Customer Care
  • Human Capital & Talent Management
  • Supply Chain & Material Management
  • Accounting & Finance

Key Deliverables

  • Overall Performance Audit Report by Activity
  • KPI Setting and Tracking system