Key Performance Indicators KPI

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Key Performance Indicators KPIs
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Purposes of (KPIs) Performance Measurement
Systems

• Providing direction and support for continuous
  improvement
• Identifying trends and progress
• Facilitating understanding of cause-and-effect
  relationships
• Allowing performance comparison to benchmarks
• Providing a perspective of the past, present, and
  future

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Key Task

• In designing a performance measurement system,
  organizations must consider how the measures will
  support
• Senior executive performance review
• Organizational planning
• Address the overall health of the organization,
  and
• How the measures will support daily operations
  and decision making.

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Key Issues

• Organizations need comparative data, such as
• Industry averages
• Best competitor performance
• As well as world-class benchmarks to gain an
  accurate assessment of performance and know where
  they stand relative to competitors and best
  practices.

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KPIs Shareholder Value

• Shareholders invest to make money.
• Management invest that money to achieve the
  objectives of the shareholders.
• KPIs should focus on achieving the objectives of
  the shareholders but not ignore the other
  stakeholders.

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KPIs Practical Guidelines

• Fewer is better.
• Link to the key business drivers.
• Include a mix of past, present, and future
• Address the needs of all stakeholders.
• Start at the top and flow down to all levels of
  employees
• Combine multiple indexes into a single index
• Change as the environment and strategy changes
• Have research-based targets or goals

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Linkages to Strategy
Key business drivers (key success factors)
Strategies and action plans
KPIs Measures and indicators
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KPIs - Measurements

• Does the measurement support our mission?
• Will the measurement be used to manage change?
• Is it important to our customers?
• Is it effective in measuring performance?
• Is it effective in forecasting results?
• Is it easy to understand and simple?

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Key objective

• The things an organization needs to do well to
  accomplish its vision are often called
• key business drivers or
• key success factors.
• They represent things that separate an
  organization from its competition and define
  strengths to exploit or weaknesses to correct.

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Key Criteria

• Good measures and indicators are actionable
• They provide the basis for decisions at the level
  at which they are applied.

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Customer Measures

• Customer satisfaction and dissatisfaction
• Customer retention
• Gains and losses of customers and customer
  accounts
• Customer complaints and warranty claims.

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Product and Service Measures

• Internal quality measurements
• Field performance of products
• Defect levels
• Response times

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Human Resource Measures

• Employee satisfaction
• Training and development
• Work system performance and effectiveness
• Safety
• Absenteeism
• Turnover of Staff (longevity of employees)

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Organizational Effectiveness Measures

• Cycle times
• Production flexibility
• Lead times and setup times
• Time to market
• Product/process yields
• Delivery performance
• Cost efficiency
• Productivity

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Governance and Social Responsibility Measures

• Organizational accountability
• Ethical behavior
• Regulatory/legal compliance (ISO 9000)
• Community service

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Common Production Quality Measures

• Defects per unit of Production
• Errors per opportunity
• Customer returns
• Patient or Customer Waiting Times
• Production per employee
• Sales per square metre

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Creating Effective Performance Measures

• Identify customers requirements and expectations
• Define work processes
• Define value-adding activities and process
  outputs
• Develop measures for each key process
• Evaluate measures for their usefulness

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Analyzing and Using Data

• Analysis an examination of facts and data to
  provide a basis for effective decisions.
• Examples
• Examining trends and changes in key performance
  indicators
• Making comparisons relative to other business
  units
• Calculating means, standard deviations, and other
  statistical measures
• Seeking to understand relationships among
  different performance indicators

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The Cost of Quality (COQ)

• COQ the cost of avoiding poor quality, or
  incurred as a result of poor quality
• Translates defects, errors, etc. into the
  language of management
• Provides a basis for identifying improvement
  opportunities and success of improvement programs

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Managing KPIs and Information

• Validity Does the indicator measure what it
  says it does?
• Reliability How well does an indicator
  consistently measure the true value of the
  characteristic?
• Accessibility Do the right people have access
  to the data?

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Common Operating Ratios for the Hotel Industry

• Average room rate (ADR)
• Revenue per available room (RevPAR)
• Revenue per available customer (RevPAC)
• room occupancy
• Average Food Service Check
• Seat Turnover (Covers)

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Call Centre KPIs
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Questions

• Suggest suitable KPIs for an airline.
• Suggest suitable KPIs for the retail sector.
• Suggest suitable KPIs for the legal profession.
• Suggest suitable KPIs for schools colleges.
• Suggest suitable KPIs for a manufacturer.

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Improving Operational Performance

• A Medical Practice Worked Example

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• Patient Care
• Response Times
• Clinical Performance
• Customer Service

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• Employee Wellbeing
• Retention
• Health / Safety / Welfare
• Satisfaction
• Compensation
• Recruitment

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Bye for now!
Im ready forsome leisure time.