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Key Performance Indicators

IAV431 Unit 8

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.

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What are Key Performance Indicators?

� Monitor and measure service delivery and business performance

� Those indicators that identify whether the organisation is meeting, or failing to meet, its aims and objectives

Why measure performance?

To identify whether we are meeting customer requirement

To help use understand our processes

To ensure decisions are based on facts, not emotion

To show where improvements need to be made

To show if improvements actually happened

To identify whether our contractors or suppliers are meeting out requirements

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SMART

� Specific

� Measurable

� Achievable

� Relevant

� Timed

How To Achieve Success

• Identify areas of activity that require greater attention

• Performance indicators that are grounded (SMART)

• Striking a balance between a comprehensive set of KPIs and information overload

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Selecting Project Specific KPI

� “What you measure is what you get.” (Kaplan and Norton, 1992).

Sources of potential KPI

• Do the KPIs provide YOU with a clear indication of progress to date and areas requiring greater attention?

• Strategic aims do not always lend themselves to measurement and require associated objectives

• No difficulty with objectives extracted from the Corporate Strategy but derived objectives may have no real ownership

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Introduction of KPI’s

• Introduction of KPIs represents a major step forwards

• Enables YOU to understand where progress is being made towards achieving strategic aims and those areas which need to be addressed

• The management review in BS EN ISO and OHSAS standards also help focus performance

Types of Measure

� Input indicators

� Process indicators

� Output indicators

� Outcome indicators

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Characteristics of good KPIs

� Meaningful

� Measurable

� Quantitative or qualitative

� Routinely collected

� Comparable – for benchmarking

� Useful

Creating KPIs

KPIs must be designed for each proposed change to the production process so that:

� there is a base line measurement taken to establish a starting performance standard

� there are measures developed to track the team's performance

� there are measures established that can highlight any variability. This can assist in future diagnoses

� reward and recognition can be effectively implemented.

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Creating KPIs

Before data is collected three questions need to be asked.

� What is the purpose of collecting this data?

� Will this data tell us what we want to know?

� Will we be able to act on the data we collect?

The goal is to create an easy-to-use, accurate measurement system with as few measures as possible.

Creating KPIs

The following questions need to be answered when setting up a data collection system:

� What type of metric is it (financial, behavioural or core-process)?

� Why was it selected?

� Where will the data be collected from?

� How will it be collected?

� How often will it be collected?

� How often and where will the metric be displayed?

� Who will use it?

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examples of goals and associated KPIs:

� GOAL 1— Boost sales 10% in the next quarter. KPIs include daily sales, conversion rate, site traffic.

� GOAL 2— Increase conversion rate 2% in the next year. KPIs include conversion rate, shopping cart abandonment rate, associated shipping rate trends, competitive price trends.

� GOAL 3— Grow site traffic 20 percent in the next year. KPIs include site traffic, traffic sources, promotional click-through rates, social shares, bounce rates.

� GOAL 4— Reduce customer service calls by half in the next 6 months. KPIs include service call classification, identify of page visited immediately before the call, event that lead to the call.

Customer Service Key Performance

Indicators:

� Customer service email count

� Customer service phone call count

� Customer service chat count

� Average resolution time

� Concern classification

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Indicators of Performance

Example Indicators of Performance

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Examples of Key Performance Indicators

Examples of Key Performance Indicators

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Examples of Key Performance Indicators

Measurement Basics

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