Notes on KPIS :-
1. KPIs monitor critical activities
KPIs represent activities that result in success when they are carried out correctly.
In other words, they define Best Practice for critical operations within an Enterprise.
For example, High Customer Satisfaction or Excellent Product Quality.
2. KPIs should be established by Stakeholders
It is important that KPIs should be defined by the individuals who are involved in
the operations that are being measured by the KPIs.
3. KPIs should support 'drill-down'
KPIs should be defined at different levels within an Enterprise and should be
established so that the KPIs at one level expand those at the higher level.
This supports drill-down so that any exceptions can be investigated for causes at
a more detailed level.
4. KPIs must be based on Standards
The organisation must define standards for the items being measured.
For example, Customer Satisfaction or Employee Loyalty.
These items need to be agreed and accepted throughout the organisation.
Tis can be a time-consuming task and require substantial discussion, resolution
and finally commitment.This in turn satisfies the need for Transparency and
Accountability that has become so important recent legislation, such as Basel II,
Sarbanes-Oxley, Homeland Security and so on.
5. KPIs must KISS
KPIs must be Kept Simple and Straightforward.
Each user should be responsible for not more than 6 or 7 KPIs.
It must be clear what is being measured, and how, and what action should be taken
when a KPI Threshold value is crossed.
This leads to the need for documented Business Processes that define 'Management Action'
for each KPI.
6. KPIs must be kept up-to-date.
KPIs need to be reviewed on a regular basis. They usually have a life-cycle that often
reflects the understanding and insight of the organisation and the individuals who
originally defined the KPIs. Increased insight leads to the need for adjustments.
7. KPIs are linked to Performance
It is important that each individual's performance is rewarded when KPIs are monitored
and actioned appropriately. This can be incorporated in the Job Description and Personal
Objectives for the individual. This will encourage buy-in by the individual.