Key Performance Indicators (KPIs)

Understanding KPIs

In our experience, key performance indicators (KPIs) are an often misunderstood part of an organisation’s arsenal of control measures. While the adage ‘you get what you measure’ does apply to performance indicators, they are sometimes overused to the point where an organisation labels a basket of perhaps two dozen measures as ‘key’. In addition to this, there are a few other common issues with key performance indicators that we often encounter:

  • Not measuring processes: a performance indicator is something that measures the outcome of a process—with a process being a series of repeatable steps designed to achieve a particular outcome. Measuring the outcome of a discrete one-off event is not a performance indicator, it’s a target.
  • Imprecise Definitions: KPIs use a series of terms to define what they’re measuring. If those terms don’t have the exact same definition for everyone, they risk being misinterpreted.
  • Misalignment: when different parts of the business are measured by competing KPIs, chaos results. A retail store aiming to keep the number of stockouts per month to a minimum is always going to end up in conflict with a warehouse trying to minimise stock on hand.

Change Factory can help you to get your KPIs under control, by:

  • Clarifying and formalising the objectives of measurement
  • Developing new or refining existing KPIs
  • Ensuring your KPIs are aligned, in order to encourage the right outcomes from all parts of your business
  • Building in review mechanisms to ensure that today’s basket of KPIs remains relevant in the future
  • Providing support and training to staff to help them work with KPIs
  • Making sure that your formal KPIs aren’t being undermined or overridden by informal ones.

For more information on how we can help you with your KPIs, contact us today.