KPI

1. KPI

2. Goal
CREATE PERFORMANCE
MEASURES THAT
ACTUALLY HELP YOUR
BUSINESS.

3.  To help grasp the concept, let’s look at a simple, illustrative example:
 Imagine a ship sailing from Hull to Amsterdam.
 The ship is expected to carry its passengers and cargo to the
destination in 12 hours.
 Throughout the voyage, the captain and crew will need to keep an eye
on:
 the weather information
 the state of the sea
 the friction of the water
 the ship’s fuel levels
 the ship’s average speed
 The listed components are all KPIs — they will help the captain and the
crew understand whether the voyage is progressing as planned, or
whether they need to make some adjustments:
 to their plan (such as move the expected time of arrival forward due to rainy
weather)
 to the KPIs they have control of (such as refill the ship’s fuel levels, or speed up)
KPI

4. Do you have a sales
goal?
Do you have a goal
for your marketing
campaign?
Do you motivate
your employees with
targets?
ARE YOU ALREADY DOING THIS?

5. Keeps daily
activities on track
with strategy
Goals are motivating
Benchmarks help
with trend analysis
Employee
engagement
WHY ARE METRICS IMPORTANT?

6.  The best measures are
obvious
This is easy
This can be delegated
Focus is needed
Tying measures to pay is the
only way to motivate
Measures always increase
performance
Measures are in place to
ensure staff are spending
their working hours on the
right activities
FACT OR
FICTION
?
True
True

7.  Do you have over 100
measures?
 Are measures selected
by an individual?
 Are there measures
that have resulted in
dysfunctional
behaviour?
 Are measures
implemented without a
cost analysis?
 Is there cynicism about
performance
measures?
RED FLAGS

8. Have a team to
select
Measure things that
matter
Select measures
that measures
multiple areas of the
business
Example: measure
profit versus only
revenue or cost
TOO MANY METRICS IS HARMFUL

9. What are KPIs?
• Simply defined, KPIs are measures that a sector
or organization uses to define success and track
progress in meeting its strategic goals.
• Key Performance Indicators (KPIs) are
quantitative and qualitative measures used to
review an organization's progress against its
goals.
• KPIs provide a measurement tool.
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10. What IS A KPI
• A KPI (Key Performance Indicator) is simply a
metric that is tied to a target.
• Most often, a KPI represents how far a metric is
above or below a pre-determined target.
• KPI’s usually are shown as a ratio of actual to
target and are designed to instantly let a business
user know if they are on or off their plan without
the end user having to consciously focus on the
metrics being represented.

11. What are KPIs?
• KPIs represent a set of measures focusing on those
aspects of organizational performance that are the
most critical for the current and future success of the
organization.
• KPIs measure performance by showing trends to
demonstrate that improvements are being made
over time.
• KPIs also measure performance by comparing results
against standards or other similar organizations.
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12. What’s
A KPI?
MEASURES THAT FOCUS
ON CRITICAL FACTORS
FOR TODAY’S AND
TOMORROW’S SUCCESS.
= KEY PERFORMANCE
INDICATOR

13. Action oriented
Impactful
Tied to a team
KPIs are supported by
management
24/7
Daily / weekly
Non financially based
Motivating
A KPI
MUST
BE…

14. Penalties to a truck driver on
being late
How
could
these
metrics
go
wrong?
HUMAN
BEHAVIOUR

15.  Marketing Qualified Leads (MQL)
 Sales Qualified Leads (SQL)
 Conversion Rate
 Brand Awareness
 Engagement Rate
 Cost per Lead
 Return on Marketing Investment
 Customer Lifetime Value (CLV
 Customer Acquisition Cost (CAC)
 Customer Retention
TOP MARKETING METRICS

16. Financial
Customer
Innovation
Internal
Staff oriented
Environment
BALANCED & STRATEGIC

17. .
THE SMALL
BUSINESS
SCORECARD
Financial
•Revenues, assets, sales, expenses, profit
margin,
Customer
•Customer service levels, close rates,
retention rates, prospects
People
•Retention, delegation, succession,
recognition, training, recruitment
External
Environment
•Awards, branding, partnerships, public
awareness, charities
Continuous
Improvement
•Innovation, training
Operations •Technology, processes

18. Why
• clarify the current position of an organization and the expectations
in terms of future performance.
• Serve as a point of reference you can use to compare past and
present performance and draw apt conclusions for the future.
• Outline what is important in a business, thus helping employees
focus on achieving this.
• They imply a consistent approach you need to implement in order
to achieve a goal.
• Increase employee engagement and motivate them to pursue the
goal.
• Make employees more accountable with their work by illustrating
what represents a good performance and what represents
underperformance.
• Help maximize resource use and eliminate inefficiencies.

19. CRITICAL SUCCESS FACTORS
Critical success factors – key issues requiring
management attention
• Represent real issues faced “here and now”
Performance indicators relate to critical success
factors– offers greater flexibility
• Critical success factors can be mapped to
strategic aims

20. ALIGNMENT WITH STRATEGIC
DIRECTION
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21. HOW ORGANIZATIONAL STRATEGY
CASCADES DOWN TO AN INDIVIDUAL
TEAM MEMBER'S GOALS AND KPIS
 Here's an example of :
 Organizational Vision: to be known for high customer
satisfaction and superior service.
 Organizational Objective: to reduce the number of dissatisfied
customers by 25 percent.
 Organizational KPI: the number of customer complaints that
remain unresolved at the end of a week.
 Team Member's Goal: to increase the number of satisfactory
complaint resolutions by 15 percent in this period.
 Team Member KPI: the weekly percentage difference in
complaints handled that result in satisfied customers, as
against unsatisfied customers.

22. ‘Need to haves’ in
the organization
Related to strategy
Easy to understand
Agreed upon in a
team
5-8 maximum
CRITICAL SUCCESS FACTORS (CSF)

23. Engagement with
staff
Recruiting the right
people all the time
Develop people
Innovate daily
Grow leaders
Make decisions
slowly, implement
rapidly
Always deliver on
time
CSF EXAMPLES

24. EXAMPLES
Critical Success Factor Metric (KPI)
Engaged staff
Staff missing training over next 2 weeks,
reported daily
Grow leaders Number of recognitions in past 2 weeks
Innovation
# planned for next 30 days -90 days
(reported weekly)

25. METRICS EXAMPLES
# of customers who ordered in XX weeks
Date of last customer interaction
# of quality problems found
# of new initiatives completed
# of feedback survey initiatives completed
# of times a caller hangs up
# of times a customer is transferred
time it takes for a problem to be resolved
time between workplace accidents
# of times that a phone call isn't answered
date of next event
number of applications for job posting
% of staff working part-time
# of recognitions and awards in last 2 weeks
feedback on recruitment
length of service by staff
# of positive press releases
debtors over 30 days/90 days
number of overdue projects
% of key work carried out by contractors
last update of each webpage
number of invoices paid late
number of strategic relationships
number of employees
number of finished projects this month% of
time spent on quality
time spent on innovation
improvement in productivity
unplanned versus planned maintenance
date of next innovation to key services
% of employees below age xx
% of employees with IT literacy
number of training hours booked
% of managers who are women
% of cross trained personnel

26. Stop creating unread
reports
Remove KPIs that
aren’t reviewed or
changing
Remove KPIs that
are harmful,
duplicated, or
unnecessary
ABANDONMENT

27. Characteristics of good KPIs
• People often use the acronym “SMART” to refer to
the characteristics of good performance indicators.
Specific Measurable Achievable
Relevant: Time-bound
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28. SMART is an abbreviation for the five conditions of
good KPI’s:
 * Specific – It has to be clear what the KPI exactly measures. There
has to be one widely-accepted definition of the KPI to make sure the
different users interpret it the same way and, as a result, come to
the same and right conclusions which they can act on.
 Not more sales – rather 10K extra per month
 * Measurable – The KPI has to be measurable to define a standard,
budget or norm, to make it possible to measure the actual value and
to make the actual value comparable to the budgeted value.
 Not impossible to measure – frustration level of Customers
 * Achievable – Every KPI has to be measurable to define a standard
value for it. It is really important for the acceptance of KPI’s and
Performance Management in general within the organization that
this norm is achievable. Nothing is more discouraging than striving
for a goal that you will never obtain.

29. SMART is an abbreviation for the
five conditions of good KPI’s:
 * Relevant – The KPI must give more insight in the
performance of the organization in obtaining its
strategy. If a KPI is not measuring a part of the
strategy, acting on it doesn’t affect the organizations’
performance. Therefore an irrelevant KPI is useless.
 * Time phased – It is important to express the value
of the KPI in time. Every KPI only has a meaning if one
knows the time dimension in which it is realized. The
realization and standardization of the KPI therefore
has to be time phased.
 Compound metrics not good

30. What is our target?
Strategic
Aim
Initiatives KPI Last
year
2012
Target
Continuous
improvement
in health and
safety
management
performance
New inspection regime,
introducing quarterly
inspections.
Number of
H&S
Inspections
3 4
Destination Zero
Poster, email and
leaflet campaign aimed
encouraging staff to
think what if...not if
only.
Number of
Lost Time
Accidents
5 2

32. NGO/foundation

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34. • 1. Quantitative Indicators - Time Spent Per
Call, miles travelled
• 2. Qualitative Indicators - employee
satisfaction survey (focus on experiences or
feelings/opinions)

35. • Input indicators: Input indicators are a type of KPI that track the
resources necessary to produce the intended outcome, such as
funding or extra staff. Input indicators can help companies keep
track of how efficiently they are using their resources.
– staff time, cash on hand, or equipment required.
• Process indicators: Process indicators represent the efficiency of a
business’s process and how effectively it is functioning.
– Tickets resolved, tickets opened, and average resolution times
• Output indicators: Output indicators measure the success or failure
of your business activities, like the number of goods or services
created through a particular process. Revenue growth and new
customer acquisition also indicate how well your business is
performing
– Eg- revenues, profits, or new customers acquired.

36. • Leading indicators: Leading indicators are
variables that can help identify long-term trends
and possibly predict successful future outcomes
of your business processes.
– Number of new patents, Number of new innovations
Lagging indicators: Lagging KPIs compare a
business’ current performance in a particular
field with their past performance in the same
field.
– after an action has taken place

37. Development of KPIs
• A number of factors should to be considered when
developing and evaluating KPIs:
1. Define the audience and use for measurement.
2. Consult with stakeholders and advisory group.
3. Choose the area to measure.
4. Achieve a balance in measurement.
5. Determine selection criteria.
6. Define the indicator
• Identify the target population
• Define the target to be achieved
• Threshold for action
• Action
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38. Define the audience and use for measurement
• It is important to define the intended
audience in order to identify and develop a
suitable KPI.
• The audience refers to the person or group for
whom the KPI will aid decision-making and can
be the service-user, the clinician, the public, the
facility or the healthcare system.
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39. use for measurement
• It is essential to note that whether the goal of the
measurement is for benchmarking, either internally
for quality improvement purposes or externally
against standards or other organizations, will
influence the KPI selection process.
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40. Consult with stakeholders and advisory group
• There should be consultation with all stakeholders
throughout the data development process.
• Consultation facilitates the identification of the
needs of stakeholders while simultaneously
contributes to the acceptance of the selected KPIs.
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41. Choose the Area to Measure
• Choosing the area to be measured should be based
on the importance of the problem, service-user
safety, potential for improvement and controllability
by health or social care system/professionals
• A healthcare problem is important if it is associated
with significant morbidity and mortality, has high
service-user volumes and is costly to treat.
• Airways – on time arrival & departure
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42. Achieve a balance in measurement
• A number of approaches have been developed to
assist in identifying a balanced set of KPIs including:
1. The “balanced scorecard” which was originally
developed by Kaplan and Norton.
2. The “Three Es” framework uses the three domains of
economy, efficiency and effectiveness.
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43. The “Three Es” framework
• Economy - which measures the acquisition of
human and material resources of the appropriate
quality and quantity at the lowest cost
• Efficiency - which measures the capacity to provide a
service for eg. effective healthcare using minimum
resources.
• Effectiveness - which measures the degree to which
the organization attains established goals.
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44. The “Balanced Scorecard” method
• In 1992, Robert Kaplan and David Norton introduced the
Balanced Scorecard concept as a way of motivating and
measuring an organization’s performance.
• The method looks at four interconnected perspectives
(dimensions). These are:
1. Financial – How do we look to our stakeholders?
2. Customer – How well do we satisfy our internal and
external customer’s needs?
3. Internal Business Process – How well do we perform at
key internal business (sub)processes?
4. Learning and Growth – Are we able to sustain innovation,
change, and continuous improvement?
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45. Balanced Scorecard Perspectives
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46. • Define relevant objectives for your KPIs
• Decide how many KPIs should you have
• Define the components of your KPIs

47. Determine Selection Criteria
• Does the KPI measure what it is
supposed to measure?
Validity
• Does the KPI provide a consistent
measure?
Reliability
• Is the KPI supported by scientific
evidence or the consensus of experts?
Explicit
evidence base
• Are the KPIs acceptable?
Acceptability
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48. Determine Selection Criteria
• Is it possible to collect the required
data and is it worth the resources?
Feasibility
• Are small changes reflected in
the results?
Sensitivity
• Does the KPI actually capture changes
that occur in the service for which the
measure is intended?
Specificity
• What useful decisions can be
made from the KPI?
Relevance
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49. Determine Selection Criteria
• Do we have a set of KPIs that measure
different aspects of the service?
Balance
• Have national and international KPIs
been considered?
Tested
• Will an undue focus on the KPI lead to
potential adverse effects on other
aspects of quality and safety?
Safe
• Has consideration been given to other
projects or initiatives?
Avoid duplication
• Is the information available within an
acceptable period of time to inform
decision-makers?
Timeliness
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50. Define the Indicator
• A clear definition of the indicator ensures that it is
appropriately interpreted by those with responsibility for
collecting the data.
• Including the rationale for the measurement will provide
context and highlight the importance of the subject being
measured.
– Identify the target population
– Define the target to be achieved
– Threshold for action
– Action
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51. Setting KPI Targets
• A performance target combines the selected
indicator with a target level.
• Specifying the quantitative degree or amount of
performance the program is expected to achieve by a
specific date, given the planned structure and
funding level.
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52. Targets Setting Summary
Introduction
Targets are those values (determined in each KPI)
that the management wants to achieve within a
certain time.
Purpose
To make the KPIs and the measurement more
quantifiable and measureable
Suitable
Techniques
• Benchmarking
• Forecasting
• Feasibility studies
• Market Research
Expected
Outcomes
Once the targets setting is
done, it is expected to
have:
• KPIs targets
• Targets values & units
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53. OBJECTIVES:
Implementation
Reporting
Abandonment
MONITORING

54. Roll out into team
performance
measures
Test measures for
behavioural
alignment
Change or remove
measures where
appropriate
IMPLEMENTATION

55. Use visualization
Simplification
Frequency
Daily reports to team
Weekly updates to
management
REPORTING