KPI's – Foundations of Success

By: Nigel Penhearow

Key Performance Indicators (otherwise known as KPI’s) are metrics used to measure key methods of working within an organisation. They can be initially used as starting points to improve a process or processes but the ultimate aim is to improve the performance of the company and to ensure strategic success and to use them on an ongoing basis.

Real Measures!

Key Performance Measures are what is called “quantitative” performance measures, meaning that they can be used to indicate how a process is performing. An example could be product delivery performance. The achievement is that with higher performance, then the company performs better than its rivals and thus is better positioned to keep customers or to acquire news ones. Key Performance Measures can also be included into staffs personal objectives which can help focus on the overall company objectives. Make sure they are attainable otherwise they can cause upset

Performance

Key Performance Measures are not always easy to create and therefore executives who are looking at the overall strategic aims need to think deeply before creating them. It is important that the Key Performance Measures are defined the same every year in order to measure ongoing performance improvement.

Key

Key Performance Measures are the real areas to differentiate the achievers in the business race versus the losers. It is key that a company keeps them down to a handful otherwise they could become unmanageable and losing their meaning to executives

Business Knowlwdge

Key Performance Measures are used in Business Intelligence to assist in creating a picture of how a business is performing. Some companys may require Key Performance Measures on a daily basis in order to acquire a complete picture as to how the business is performing. Build the measures to your true requirements. If used in the correct way it can help in keeping the business firmly on track.
Key Performance Measures can help but one must remember to not just run a business just by by statistics. It is also important to use business sense as well.

Organization

Key Performance Measures can differ depending on the type of organisation and the overall strategy. In todays world of rapid information collection, the measures can often be created very quickly with very little (or no) manual intervention. Talking about my personal experience, a lot of the Key Performance Measures results are automatically waiting in my email “inbox” every morning or they enter into my inbox during the day as events unfold. The measures help you retain (or even gain) control.

Conclusion

Key Performance Measures are often considered for the long term rather than the short term. They can drive business practices and processes and at the same time offer a significant difference between you and your competitors.Think hard about what needs to be put in place. The Key Performance Measures need to be measurable and reflect where the firm wants to be in terms of its strategic future.

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Nigel Penhearow is a Operations Director for a major blue chip company based in the UK. He is a member of various Institutional bodies and has given various speeches in the United Kingdom and the USA on business analytics, key performance measurement and best business practice. His web site can be found at www.operations-director.com.

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