Ten Key Points for Implementing Key Performance Indicators (KPI’s) The purpose of Key Performance Indicators (“KPI’s” or often called “metrics”) is to provide measureable baseline guidelines for team members within an organization. Most organizations operate without KPI’s. An analogy of a business without KPI’s would be similar to playing basketball full-time without knowing how to or being allowed to keep score. How long would the game without scores be of interest to the players? How popular would the game be? If you think about it, if you don’t measure your performance and contribution to the company it is pretty much like playing basketball without keeping score. Learn more at www.PathwayPartnersLLC.com or email us at info@PathwayPartnersLLC.com

1. TEN KEY
for implementing
POINTS
Key Performance Indicators (KPI’s)
Excerpts from Mistakes Millionaires Make, by Harry Clark
Take the Entrepreneurial Risk Assessment
at: www.pathwaypartnersllc.com

2. The purpose of Key Performance Indicators
MEASURABLE
SUCCESS
for team members within an organization.
GUIDELINES
(“KPI’s” or often called “metrics”) is to provide

3. Most organizations operate without KPI’s.
An analogy of a business without KPI’s
would be similar to playing
basketball full-time without knowing
how to or being allowed to keep score.

4. How long would the game
to the players?
INTEREST
without scores be of

5. How
would the game be?
POPULAR

6. If you think about it,
if you don’t measure your performance
and contribution to the company
it is pretty much like playing basketball
without keeping score...

7. Let’s take the analogy
one step further

8. If no one knew the rules of the game and there was no
clarity about how to win, what would it look like?

9. One player might assume that dribbling the ball is
best and therefore bounces the ball repeatedly.

10. Another might think passing the ball is how to win
and therefore does nothing but pass the ball.

11. Yet another might think
hitting the backboard
with the ball is how to win.

12. You see, without clearly defined
it is hard for a team to be truly successful.
METHODS OF
DETERMINING SUCCESS

13. KPI’s that are well implemented create total
alignment of energy and an environment for success
for each team member and the team as a whole.

14. Having KPI’s allows all team members to feel
successful and to understand how their contribution
is directly related to the overall success of the company.

15. TEN KEY
The following are
POINTS
to understand about KPI’s

16. 1
KPI’S
3-5

17. Each and every team member has three to five KPI’s.

18. Do not fall for the temptation to think
“I have 23 items that are important for me
to measure each week.”

19. Everyone in the organization from the receptionist
to the CEO must have 3 to 5 KPI’s,
NO MORE.

20. The KPI’s are generated from the bottom-up,
meaning that the CEO’s KPI’s cannot be any different
than the aggregate of those created for
all the other team members.

21. 2
MEASURABLE

22. The KPI’s must be unambiguously measureable.
There cannot be any question as to what is being measured.
For example: Produce 30 widgets per hour
Average 15% profit on projects,
Customer satisfaction score of 9.85 or greater, etc

23. 3
TIME
BOUND

24. There must be definitive dates or timeframes
associated with each KPI.
For example, 2016 Average Employee Satisfaction
Score of 74/100, or Reduce A/R aging to 32 days
by November 15th.

25. 4
PASEO PRINCIPLE

26. “What gets measured gets done” is very true.
It is vital that you consider in advance what
the potential unintended consequence might be of
measuring each KPI.

27. In some cases, if you measure one facet then
there may be more important areas that
will be detracted from
and overall performance will be reduced.

28. Make sure you are measuring
the most important functions for the organization.

29. 5
PRACTICALITY

30. Make sure the KPI data elements are easily obtainable.
You do not want to spend significant time and expense
developing processes or systems to measure your KPI’s.

31. 6
FORMULAS
AND
PERCENTAGES

32. One easy way to track KPI’s is to turn many numbers
into a single factor, percentage or ratio.
That way it is easy to track.
The A/R aging stated previously is a calculation,
and 32 days is easy to understand.

33. 7
PROFESSIONAL
DEVELOPMENT

34. Consider encouraging each team member to add
one KPI as a professional development goal.
For example, enroll in MBA program by January,
start Toastmasters in February.

35. 8
TIMECYCLE
AND
REVIEWAND
FEEDBACK

36. The best KPI’s have short cycle times.
This means how quickly they can be measured.
For example, “Average 6 calls per day” is more quickly
measured than an annual employee satisfaction score

37. The faster cycle times allow for
quicker process improvement.

38. It is important that the teams review the KPI’s and
discuss how to refine them to make them
more meaningful and challenging.
Remember, the idea is to make the team
function better and more successfully.

39. 9
LONG
PROCESS
TERM

40. KPI’s typically take about 30-60 days
to fully implement and about six to eight months
for the teams to really get into them.

41. It will initially feel uncomfortable and odd
for some team members but after six months or so
they take on a life of their own and
changes the game of business!

42. 10
EVALUATION
PERFORMANCE

43. KPI’s are helpful for use in periodic performance reviews.
Eventually, it is important for the KPI evaluation to have
some influence on income (whether bonuses or base pay).

44. Learn more by reading my up-coming book

45. Or by taking the
Entrepreneurial Risk Assessment Survey at
http://pathwaypartnersllc.com/
Or by subscribing
And remember:to my blog
sharing is caring