Key Performance Indicators

5. Jan 2017

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Key Performance Indicators

  1. Key Performance Indicators ►Measurable indicators that will be used to report progress that is chosen to reflect the critical success Strategic ► A factor considered to be most conducive to the achievement of a successful Critical Success Factors (CSF)
  2. ►Generally there are Two approaches : - KPI based on Strategic themes - KPI based on Critical success factors * They both drive from Objectives from strategic aims Performance indicators flowing from objectives Status and progress indicators * Year on year change indicators
  3. What IS a KPI ?  A KPI (Key Performance Indicator) is simply a metric that is tied to a target.  Most often, a KPI represents how far a metric is above or below a pre-determined target.  KPI’s usually are shown as a ratio of actual to target and are designed to instantly let a business user know if they are on or off their plan
  4. A set of measures that a company or industry uses to gauge or compare performance in terms of meeting their strategic and operational goals.  KPIs vary between companies and industries, depending on their priorities or performance criteria.
  5. The five conditions of good KPIs:  Specific : – It has to be clear what the KPI exactly measures.  Measurable : – The KPI has to be measurable to define a standard, budget or norm, to make it possible to measure the actual value and to make the actual value comparable to the budgeted value.  Achievable : – Every KPI has to be measurable to define a standard value for it. It is really important for the acceptance of KPI’s and Performance Management in general within the organization that this norm is achievable.
  6.  Relevant :– The KPI must give more insight in the performance of the organization in obtaining its strategy. Therefore an irrelevant KPI is useless.  Time phased :– It is important to express the value of the KPI in time
  7.  Improve personnel’s understanding of Company .  Improve personnel’s awareness of maintenance performance. + = Objectives of KPIof KPI
  8.  KPIs are directly linked to the overall goals of the company.  KPIs are measurements that define and track specific business goals and objectives. Business Objectives Key Success Factors (KSFs) Key Performance Indicators (KPIs) Tracked by.Determine.
  9.  The larger or smaller organizational strategies require monitoring, improvement, and evaluation.  Once an organization has analyzed its mission, identified all its stakeholders, and defined its goals, it needs a way to measure progress toward those goals.  KPIs are utilized to track or measure actual performance against key success factors.
  10.  KPIs should be clearly linked to the strategy  KPIs have to provide the answers to our most important questions.  KPIs should be primarily designed to empower employees and provide them with the relevant information to learn. How to design KPIs
  11.  Identifies everything that is easy to measure and count.  Visibility on performance and strategic goal  It helps to measure both the financial and operational goals of a company.  Efficient management  A team work on the basis of shared and measurable objectives.  KPI’s do not give answers, rather they raise questions and direct once attention. Advantag es
  12.  The KPI’s is intended to simply improve future results without reference to external parties and benchmarks.  Frequency of Data Collection.  Should be measured frequently.  No connection with the external database.  Short – term  Used to punish rather than to motivate and equip Disadvantag es
  13. Process KPIs: - measure the efficiency or productivity of a business process.  Examples - Days to deliver an order. Input KPIs: - measure assets and resources invested in or used to generate business results.  Examples - Dollars spent on research and development, Funding for employee training, and Quality of raw materials. Types of KPIs
  14. Output KPIs:- measure the financial and nonfinancial results of business activities. Examples: Revenues, Number of new customers acquired. Leading KPI :- measure activities that have a significant effect on future performance.
  15. Lagging KPI :- is a type of indicator that reflect the success or failure after an event has been consumed.  Such as most financial KPIs, measure the output of past activity. Outcome KPI: - Reflects overall results or impact of the business activity in terms of generated benefits, as a quantification of performance.
  16. Qualitative KPI:- A descriptive characteristic, an opinion, a property or a trait.  Examples are employee satisfaction through surveys which gives a qualitative report. Quantitative KPI:- A measurable characteristic, resulted by counting, adding, or averaging numbers. Quantitative data is most common in measurement and therefore forms the backbone of most KPIs.  Examples are Units per man-hour.
  17. Thanks Shady Mohammed