KPI Development

Key Performance Indictator (KPI) Development


A KPI is a Key Performance Indicator. In simple terms, this is a measure applied to important parts of your business to ensure it is performing properly.

KPIs should

  • Be simple (almost effortless) to compile.
  • Be clear and easy to understand.
  • Be numeric and tangible.
  • Encourage behaviours that have a positive effect on the business.
  • Be owned by those that influence their outcome.
  • Be something to be proud of that focuses the team on a common goal.

KPIs should not

  • Be tough to compile, taking valuable resources away from other activities.
  • Be used as a weapon for political ends.
  • Be confusing or ambiguous.
  • Be a tool for mangers to analyse staff.
  • Cause people to find "a way around" to make the number look good.

Since Key Performance Indicators (KPIs) are a measure of performance and such measures are commonly used to help an organisation define and evaluate how successful it is; in terms of making progress towards its long-term organisational goals... the question is which measures should my company use?

KPIs reflect the critical success factors of an organisation and they differ from one organisation to the next. Every business has different KPI's.

For example, for a restaurant, the KPIs might be:

  1. % of Food Cost to Turnover
  2. % of Wages Cost to Turnover
  3. Turnover

A motel would have a different set of KPI's. These might be:

  1. Occupancy rate
  2. Average room rate achieved
  3. % of Wages cost to Turnover

As you can see the KPIs are very different. There will be a unique set of KPIs for your business!

The act of monitoring KPIs in real-time is known as business activity monitoring (BAM). KPIs are frequently used to "value" difficult to measure activities such as the benefits of leadership development, engagement, service, and satisfaction. KPIs are typically tied to an organisation's strategy using concepts or techniques such as the Balanced Scorecard.

 

  1. Why? Clarify "why" we are reviewing our measures. Ask questions like: Who are the key stakeholders? What needs to be different? What is going well? Where are the threats? Where are the opportunities? Complete a SWOT

  2. Strategy - In broad terms, what are we going to do to compete in the next 5 years. Will it be waste reduction, innovation, more sales, acquisition, open new markets, expand current share, tackle new market sectors, etc.

  3. What's it worth? Opportunity matrix, process analysis to reduce cost base, cost and revenue of new sales, etc. Generally, what will it be worth to reach the strategic aims. Go back a step if necessary

 


Feedback Form
Generate Leads