To view recording: https://youtu.be/GP7rtDLAYEg or watch the video at end of the slide The Balanced Scorecard Institute and partner Informa Middle East invite you to participate in our upcoming complimentary webinar, ‘KPI Best Practices’, which will discuss the relationship between strategy execution and KPIs. Developing meaningful KPIs to measure strategy execution is both an art and a science, involving a deep understanding of what to measure, how to measure, how to analyze performance information, how to report and clearly inform others regarding desired results and performance, and how to use the information to make better decisions. This webinar introduces one of the main topics at our upcoming Saudi KPI for Business Strategy & Transformation workshop. Join the Balanced Scorecard Institute's Howard Rohm, Co-Founder and President, and Suzy Nisbet, Senior Associate and Consultant, as they discuss developing strategic, operational, project, and organizational capacity KPIs, aligning KPIs to strategy, measuring intangible goals, streamlining measurement and reporting processes, and creating derivative KPIs for employees at all organizational levels. Sharing best KPI practices from their worldwide client experience, this 40-minute webinar (followed by a 20-minute Q&A session) will provide the knowledge and insight to better understand the relationship between strategy and KPI's. Webinar participants will learn how to: • Improve managers' and employees' perception of the value and importance of measuring performance • Lift the skill level of managers and employees in selecting meaningful measures and using those measures to make better informed decisions • Use KPIs to build individual and collective accountability for results

1. KPI Best Practices
Presented by:
Howard Rohm, Co-Founder and President
Suzy Nisbet, Senior Associate and Consultant
Balanced Scorecard Institute
November 2017
1

2. 2
• KPI Myths and Mistakes
• KPI Best Practices
Topics
“People and their managers are working so hard to be sure
things are done right,
that they hardly have time to decide if they are
doing the right things.”
Stephen R. Covey

3. Good KPIs (Performance Measures):
• Provide objective evidence of progress on achieving a
strategic objective or goal
• Measure what is intended to be measured, to help
inform better decision making
• Offer a comparison that gauges the degree of
performance change over time
• Track organization progress -- organization efficiency
and effectiveness -- quality, timeliness, safety and
security, governance, compliance, behaviors, economics,
project performance, personnel performance, and
resource utilization
• Are valid, verifiable and balanced between leading and
lagging indicators
KPI Definition and Guiding Principles
KPI’s are the critical (key) indicators of progress toward
a desirable outcome
3

4. “I’ll Find My Measures In A Book (or on the Internet)”
Performance Measurement Myths and Mistakes
4

5. Performance Measurement Myths and Mistakes
5
Milestone Measures are Not Strategic Measures
Goal
or
Objective
Do Initiative
Measure
Initiative
ABetterSequence
Strategic
Objective
Strategic
Initiatives
Strategic
Measures
and Targets
 Project
Measures
and Targets

6. 0
10
20
30
40
50
60
2005 2006 2007 2008
Total No. of Employees
Leaving the Organization
“Our employees are
leaving—we’re in
trouble!”
0
500
1000
1500
2000
2500
2005 2006 2007 2008
Total No. of
Employees
0%
2%
4%
6%
2005 2006 2007 2008
Turnover Ratio = No. leaving /
total No. of employees
Many measures are best expressed as
ratios:
• Percent completion
• Coverage, fraction of the total possible
• Error or defect rate
• Per capita cost
• Efficiency = Output / Input
• Productivity = Output / Cost (or Output /
work hour)
“We need to start counting things.”
PerformanceMeasurementMythsandMistakes
6

7. “We’re in a hurry…let’s just use the measures we have.”
Other Performance Measurement Myths
and Mistakes
7
“Here is an easy way to do this —write a vision (or mission)
statement, set some goals, select programs and projects for
each goal “bucket”, and pick some milestone measures.”
“Our strategy is what we are currently working on…find
some measures there.”
“Just buy some software for performance reporting…use the
measures the come with the software.”

8. 21st Century Strategic Management System
“Connects the Dots”
8
Answers Both Strategic and Operational Questions:
“Are we doing the right things, and are we doing them right?”
Vision
Mission
Goals
(Desired Results)
Strategy & Objectives
(The “Strategic How”)
Budget and Strategic Operating
Plan (“How Much and What”)
Projects, Programs, and
Services
Are we doing
the right
things?Performance
Information
Are we doing
things right ?Operate with Excellence

9. KPIs Help With Many Management Challenges
9
Adapted from Performance Measurement, Gary Cokins, 2009
Helps managers and employees understand and
monitor organizational strategy
Strategy execution
failures
Employees understand what is desired and take
accountability for hitting targets; builds
enterprise-wide accountability for results also
Lack of accountability
for results
Provides analytical basis for faster, more
informed decisions
Decision making too
slow or based on
limited information
Provides efficiency and effectiveness
performance information to inform budgeting
Lack of strategy input
to the budgeting
process

10. 1 Describe Intended Results
2
Understand Alternative
Measures
3
Select the Right Measures for
Objectives
4
Define Composite Indicators, If
Needed
5 Set Targets & Thresholds
6
Define and Document Selected
Performance Measures
KPI Development
Step Five
7
Select the Most Appropriate
Automation Tool
8
Collect and Monitor
Performance
9 Analyze and Draw Conclusions
10 Improve Performance
Performance Analysis
Step Seven
Performance Measurement and Analysis
“Deep Dive” Process
10

11. Performance Data / Analysis / Public and Internal Reporting
Reporting
Different Types of KPIs Measure Organizational
Performance
11
• Financial
• Customer
• Internal Process
• Organizational
Capacity
Strategic
Measures
• Efficiency
• Output
• Quality
• Timeliness
Operational Measures
(Product / Program / Service)
• Schedule
• Resource
• Risk
• Scope
Project
Measures
• Human Behavior
• Human
Performance
Employee
Measures
• Hazard
• Economic
• Security
• Operational
• Strategic
Risk
Measures

12. Strategic Impact Measurements
Operational Measurements
Inputs
(e.g., FTE’s,
budgets)
Process
(e.g., efficiency –
output/input,
cycle time, cost
per unit)
Outputs
(e.g., widgets
produced,
brochures
produced)
Project Measures
(e.g., schedule, resources, scope, risk)
Intermediate
Outcomes
(e.g., widget sales,
awareness)
End
Outcomes
(e.g., profitability,
program impact)
Strategic Business Intelligence Increases
Focus KPIs on Outcomes and the Drivers of
Outcomes
12

13. Vision & Mission language:
• “World – class”
• “High-performance”
Project, Program or Service Language:
• “Train staff”
• “Implement the new Economic Reform Program”
Problem: Too Low (project specific)
Risk: too narrowly defined; strictly
operational
Problem: Too High (Vague)
Risk: not actionable; will not give
actionable focus and direction
30,000 ft.
15,000 ft.
Ground
Level
25,000 ft.
Strategic
Altitude
Objective language:
• “Improve Customer/Citizen Satisfaction”
• “Improve Staff Knowledge & Skills”
• “Reduce Cost of Service”
Strategic
Objectives
Best Practice Tip: Use Strategic Objectives
13

14. Improve
Customer
Retention
Financial
Customer/
Stakeholder
Business
Processes
Organizational
Capacity
Lower
Cost
Lower
Wait Time
Increase
Process
Efficiency
Improve
Knowledge
and Skills
Increase
Profitability Increase
Revenue
Lower
Cycle
Time
Improve
Tools and
Technology
Leading
Question
If _ Then _?
Leading
Question:
How?
Improve
Tools &
Technology
Improve
Communications
Clarity
Improve
Customer
Satisfaction
Use Strategic Conversations to Build Your Strategy Map
Best Practice Tip: Create a Strategy Map
14

15. Process Flow
Analysis
Cause-Effect Analysis or Ishikawa
(Fishbone) Diagram
Effect
Resources
Systems
Methods
Policies
Environment
Process OutputInput
Logic Model
Outcome
Best Practice Tip: Use KPI Tools to Identify What to Measure
15

16. Customer experience
drives positive behaviors:
•Recommendations from
customers to potential
new customers
•Repeat orders
Improve
Customer
Satisfaction
Results
Resourcing:
•Budget
•Workforce
(FTEs)
•Infrastructure
Production attributes:
•Quality
•Efficiency
•Effectiveness
•Cost
Customer
Interaction:
•Accurate
information
•Problems solved
quickly
Service or
product delivery
attributes:
•On-time delivery
of services
•Order is correct
Resourcing Delivery
Customer
Interaction
Products/
Services
•Costs of products & services
•FTE costs
•Indirect costs
•Capital costs
•Input/output
•Time to process order
•Cost to process order
•Rejects/rework
•% accurate order
placement
•% satisfied with
service
•% delivered on
time
•% delivered
correctly
•% satisfied
•% reorders
•New customer
recommendations
Example: Intended Results Drive KPI Development
Strategic Objective--Improve Customer Satisfaction
16

17. Customer Loyalty
Annual
Satisfaction
Survey Score
Transaction
Satisfaction
Survey Score
# of
Complaints
# of
Referrals
Service Level
Agreement
Quality Score
Timeliness
Score
A Composite Index Captures Different Dimensions of
an Intended Result
17

18. Set Targets and Thresholds
18
Target: the desired level of
performance for the reporting
period in question
Threshold: the upper and lower
limits of desired performance
around a target value
Green / Yellow
Threshold
Yellow / Red
Threshold
Target
• Target setting should not be arbitrary
• Targets based on: `
o Existing baseline data
o Best practice (benchmarking) results
o Required level of performance to achieve an organization goal (e.g., customer satisfaction)
o Or other logical comparative
• Targets should be reviewed periodically against actual performance and adjusted as necessary

19. • Specific
• Measurable(Motivating)
• Achievable(Assignable,Attainable,Ambitious,Aspirational,Appropriate)
• Relevant(Realistic,Reasonable,Results-based)
• Time-related(Time-bound)
Example:Decreasetheaveragetimetoresolvecustomercomplaintsfrom10
minutesto7minutesbytheendofthirdquarter2018.
SMART is a Filter…not a Framework.
Just Because Measures are SMART Doesn’t Mean They are RIGHT!
Make it SMART (Goals, Objectives, Measures)
19

20. Visualize Performance Information To Better Inform
Decision Making
20
Management
Dashboard
Source: Spider Strategies and Actuate
Maps ReportsDashboards Cloud-Based Charts/Graphs

21. Clients/Stakeholders
• % satisfied
• Benefits on time
• New clients added
• Clients successfully
served
• New program
services added
• Quality of Life index
Financial
• Funds control
• % outsourced
• Cash reserves on
hand
• Costs managed
• Average program
cost/client served
• Audit effectiveness
• Unspent obligations
• Program budget
Internal Processes
• Quality rate
• Productivity
• Downtime
• Bottlenecks
• Wait time
• Time to repair
• Hours lost to injury
• Missed deadlines
Organizational
Capacity
• Employee satisfaction
• Employee trained
• % cross trained
• Training hours/
employee
• Computer currency
Why is this more valuable?
Understanding relationships among performance drivers of results
leads to more informed decision making and smarter actions.
Desired Result—Better Decisions, Informed by
Performance Information
21

22. Align Business Unit And Employee Objectives With
Corporate Strategy
22
Vision: Earn our customers trust every day by delivering seamless service,
seeking innovative solutions, and exceeding expectations.
Strategic Measure: % of customers satisfied
with information received over the Internet
Strategic Initiative: New Web Portal for
Customers to get improved information faster
Objective:
Improve
Customer
Satisfaction
Strategic Measure: Service
availability awareness survey score
Strategic Initiative: Communications program
announcing new information hotline
Objective:
Improve
Information On
Available Services
Personal
Objective:
Improve Web &
Print Content
Delivery
Measure (Accomplishment): Web content and
print media delivered on-time with
minimal re-work
Measure (Behavior):
Web design skills
Initiative (From Personal Development Plan): Web
design training at local community college
Tier 2:
Department/Unit:
Tier 1:
Enterprise-Wide
Tier 3:
Employee (Operational):

23. Cascaded corporate scorecard to business units and teams
Customer Example:
Financial Example:
Corporate
Operating
Divisions
Division #1 Director
•Operating Margin
Manager •Variable Costs
•Mfg. Overhead
•Customer
Satisfaction
•Variable Costs
•Profitability
•Customer
Retention
•On time
delivery
•Quality
•Supply Availability
•Schedule Adherence
Example: Complimentary KPIs in a Manufacturing Plant
23
Team # 1
•Scrap Rate
•Labor/ Unit

24. Aligning Individual Objectives/Goals to Unit
Objectives
24
Start With:
- Tier 2 Objectives
- Previous Individual
Goals
- Job responsibilities
(duties, tasks,
activities)
- Competencies
(knowledge, skills,
abilities)
- Organization Values
Process:
- Evaluation of
performance and
goal
accomplishment
- Feedback
- Coaching
- Redefine
responsibilities
- New goal-setting
Resulting
Actions:
- Alignment with
organization
strategic objectives
- Rewards and
recognition
- Training
- Continuous
coaching
- Meaningful
individual
development plans

25. Criteria for Setting Individual Objectives/Goals
25
• Link to higher level objectives
• Clearly define expected outcomes and
results – not a list of activities
• Challenging but achievable
• Obtain buy-in from employee
• Set realistic number (typically 3-5)
• Establish action steps or milestones and
process to track
• Monitor and adjust as appropriate
• Make them SMART

26. Examples: Aligned Goals
26
Corporate Goal Individual Goal Measure Target
Control Expenses Reduce printing
costs
% cost reduction 5%
Increase New Client
Base
Increase major
clients
# of new clients
with $2m+
revenue
2 (achieved)
3+ (exceeded)
Improve Operational
Efficiency
Decrease time to
complete new
designs
% time reduction 10%
Increase Knowledge
and Skills
Improve Excel
Skills
Demonstrated
ability to create
complex
spreadsheets
August 15

27. Source: WorldatWork
27

28. Linking Performance to Rewards
28
• Line of sight and ability to influence results
• Short-term incentives
• Must be budgeted
• Plan must be clearly communicated and
documented
• Perception of fairness is important

29. • Start with the end in mind
• Words matter
• Use the right kind of chart to convey performance
information
• Use measurement data to tell a performance story
• Don’t just measure the easy stuff
• Your most meaningful KPIs are in the heads of your
employees, not in a book or on the Internet
“Performance measurement is about story telling.”
Best Practice Summary
29

30. “It’s a journey…not a project.”

31. Options for Learning More
31
KPI Professional Certification
• 5-day Boot Camp
• Comprehensive look at developing and implementing
KPIs using various tools and methods
• Apply the methods to your own organization in a
comprehensive application project
Visit: www.kpi.org

32. The replay of this webinar and a link to download the slides
will be emailed as well as posted here:
http://www.balancedscorecard.org/KPI-Best-Practices-Webinar
20% Discount Code for the
Forum: BSIWEB20