Key Performance Indicators

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 Agenda

01 The World of KPIs 05 KPI Alignment

02 Understand KPIs 06 KPI Documentation

03 KPI Typology 07 Working with targets

04 KPI Selection 08 Data Gathering

The World of KPIs KPI (Key Performance Indicators)
▪ A KPI is a metric that provides the measurement of the activities that go into achieving a
specified business objective
▪ Simply defined, KPIs are measures that a sector or organization uses to define success and
track progress in meeting its strategic goals.
▪ Key Performance Indicators (KPIs) are quantitative and qualitative measures used to review
an organization's progress against its goals.
▪ KPIs provide a measurement tool
▪ KPIs measure performance by showing trends to demonstrate that improvements are being
made over time.
▪ KPIs also measure performance by comparing results against standards or other similar
organizations.
The World of KPIs The Value Added by KPIs

Improvement

Clarity Focus
Communication
The World of KPIs
Comparison

Priorities Decisions Communication

Understand KPIs
Metrics vs. Key Performance Indicators
Metrics are used to measure different aspects of business activity at a
specific point in time. KPIs, however, embody strategic objectives and
measure performance against a specific target. These targets are defined
in strategic, planning or budget sessions and have a range of
performance. KPIs are the detailed specifications that are used to track
business objectives.

“ So all KPIs are metrics, but not all metrics are KPIs.”
Understand KPIs
Metrics vs. Key Performance Indicators

Metrics KPIs
$ Operating Budget % Budget variance

# Working hours per year $ Operating costs

# Employee age % Employee Turnover

# Employees % Client satisfactio

Understand KPIs
Types of performance measures

• There are three types of performance measures:

1. Key result indicators (KRIs) - tell you how you have done in a
perspective.

2. Performance indicators (PIs) - tell you what to do.

3. Key Performance Indicators (KPIs) - tell you what to do to increase

performance dramatically.
Understand KPIs ✓ KPIs start with one of the symbols below

Value of Number of Percentage of Qualitative statement

$ # % *

✓ Objectives start with verbs “ Example: Maintain high levels of profitability “

✓ Initiatives start with nouns “ Example: CRM implementation project “

✓ SMART Objective

• SMART Objective : Increase current market share by 20% by FY end under Sales Manager`s Leadership
• Objective : Increase market share
• KPI : % Market share
• Target : 20% SMART
• Responsible : By Financial Year end Objective
• Timeframe : Sales Manager
KPI Typology

Efficiency

Lagging Outcome Quantitative

KPI Typology

Leading KPI Lagging KPI Qualitative KPI

Measure things that Look back at past Describe data, narrative

address what can create performance • Interviews
future value • Focus groups
• Observation sessions

Quantitative KPI Efficiency KPI Effectiveness KPI

Numbers and statics Extent to which time effort The extent to which a
• Calculation or cost are well used for the desired outputs or
• Surveys desired results outcomes is achieved

* All KPIs are quantitative, bust they can measure different aspects of objective
KPI Selection

KPI Selection Process and Techniques Text

Prepare for KPI selection Facilitate the KPI selection Here on KPI selection
Follow-up

▪ KPI selection workshop

▪ Scope clarifications ▪ KPI Documentation
▪ Relevant questions framing
▪ KPI expo ▪ First performance review
▪ Value flow analysis
▪ KPI clustering meeting
▪ KPI balancing

Objective Scorecard

Processes Dashboard
KPI Selection
Workshop

Industry Board
standards

Benchmarking KPI Management

Selection
Sources
Historical
Competitors
data

External Compliance
lists
KPI Selection Who should determine the appropriate KPI’s for a company?

Employees Stakeholders
KPI Selection KPI selection Technique “Value Flow Analysis”

Objective : Continually improve skills through learning experience

Input Process Output Outcome

$ Training budget # Training per employee % Staff meeting desired
% Employees trained
# Training Support Staff # Training Courses competency level
% Participant satisfaction
organized # Skill level
with training experience
 Characteristics
KPI Selection of good KPIs

KPI characteristics identified in the literature are:

1. Relevant to and consistent with the specific organization's vision, strategy and objectives.
S
Relevant
2. Focused on organization wide strategic value rather than non-critical local business outcomes.
M
3. Representative – appropriate to the organization together with its operational performance.
Clearly
defined 4. Realistic – fits into the organization ’s constraints and cost effective; A
Balances 5. Specific – clear and focused to avoid misinterpretation or ambiguity;

6. Attainable – requires targets to be set that are observable, achievable, reasonable and credible
R
under expected conditions as well as independently validated;

7. Measurable – can be quantified/measured and may be either quantitative or qualitative;

T
8. Timely – achievable within the given timeframe;
KPI Alignment KPI Alignment Approaches

Organization

Business Business Business

Unit 1 Unit 2 Unit 3
Organization

Business Business Business

Unit 1 Unit 2 Unit 3

* In practice, many companies find themselves between the two extreme approaches and recur to a combination of tactics
KPI Alignment KPI Cascading

Business Unit Department A Team A1

O1 : Same objective O1 : Same objective O1 :

KPI1a KPI1a 1 KPI cascaded
KPI1a
Same KPIs
KPI1b KPI1b 1 Specific KPI KPIA1b
Team A2
O2 : O1 : O1 :
KPI2a Specific KPIs KPI2Aa KPI1b
1 KPI cascaded
KPI2b KPI2Ab 1 Specific KPI KPIA1b

O3 : OA3 : OA2
Support the achievement of O3 Team specific
KPI3a KPI3Aa KPIA2a objective
KPI3b KPI3Ab KPIA2b Specific KPIs

Adapted objective
Adapted KPIs
KPI Documentation KPI Documentation form Design

Form Sections Fields

Identification Name, Number, functional area
Definition and Usage Definition, BSC perspective
Calculation Sub-metrics, formula, trend
Orientation Meaning, impact, implementation level,
metrics type
Purpose Purpose, link to strategic objective
Data profile Automation, frequency, time-lag, integrity,
limitations
Targets Intervals, benchmarking fit
Administration Owner, Custodian, source
KPI Documentation KPI Documentation Process

• Review internal literature

1
• Review external resources
2
• Consult with staff collection or using the data
3
• Present to KPI owner for approval
4
• Review and approve by KPI architect / SME / Strategy Manager
5
• Approve by Management team
6
• Add to organizational KPI library
7
Working with targets Target Setting Approaches

Set target Value

• Increasing
Determine trend • Decreasing
• Within rage
• Above target
Establish thresholds • In tolerance range
• Below target

Define each threshold

Data Gathering Determine Selection Criteria

• Do we have a set of KPIs that measure

Balance different aspects of the service?

• Have national and international KPIs

Tested been considered?

• Will an undue focus on the KPI lead to

Safe potential adverse effects on other
aspects of quality and safety?

• Has consideration been given to other

Avoid duplication projects or initiatives?

• Is the information available within an

Timeliness acceptable period of time to inform
decision-makers?
Data Gathering Data Gathering Governance

KPI Owner Data Custodian

Responsible to reach KPI Responsible to gather data
targets for KPI

Report Generate
This role can be taken by:
▪ Data custodian
▪ KPI Owner
▪ A third party within the organization ( e.g. data analysis,
strategy / performance manager )
Top 3 Take-Aways

▪ Multiple People
▪ Multiple Departments

▪ How and when will they be used

▪ Keep it simple
▪ The result is more important than the tool
▪ It is NOT a techie solution
 Tools

Keep it simple – Focus on the result not the tool

 Templates & Reports
KPI documentation form KPI data gathering template KPI selection for expo

7. KPI documentation form 4. KPI selection for expo

This template outlines a basic version of a KPI documentation form. The number of
documentation fields and sections in which they are grouped will vary based on the
9. KPI data gathering template Document presenting a list of KPIs identified that are relevant for the
organizational context. Use as many fields as needed. KPI selection workshop and can be considered when establishing
specific KPIs for the department or team.
Documentation form Section number 1 This template can be used to capture data for active KPIs.
structure Section number 2
Section number 3
Department name:
Section number 4 KPI name Department name
Section number 5 Department description:
Section number 6 Month Data Department description
KPI Documentation Form Name of the chosen KPI
1 Data for month 1
Section number 1 2 Data for month 2
Field number 1 Complete field
Field number 2 Complete field 3 Data for month 3
Section number 2 4 Data for month 4 No. Key performance indicator Data source
Field number 3 Complete field 1 Key performance indicator Data source
Field number 4 Complete field 5 Data for month 5 2 Key performance indicator Data source
Field number 5 Complete field
6 Data for month 6 3 Key performance indicator Data source
Section number 3
Field number 6 Complete field 7 Data for month 7 4 Key performance indicator Data source
Field number 7 Complete field 5 Key performance indicator Data source
Field number 8 Complete field 8 Data for month 8 6 Key performance indicator Data source
Field number 9 Complete field
9 Data for month 9 7 Key performance indicator Data source
Section number 4 8 Key performance indicator Data source
Field number 10 Complete field 10 Data for month 10
Field number 11 Complete field
9 Key performance indicator Data source
Field number 12 Complete field
11 Data for month 11 10 Key performance indicator Data source
Section number 5 12 Data for month 12 11 Key performance indicator Data source
Field number 13 Complete field 12 Key performance indicator Data source
Field number 14 Complete field 13 Key performance indicator Data source
Field number 15 Complete field Arguments for why a KPI data gathering template is useful: 14 Key performance indicator Data source
Section number 6
Insert text here 15 Key performance indicator Data source
Field number 16 Complete field
Field number 17 Complete field
Field number 18 Complete field
1. Arguments why a list with primary and secondary data
Field number 19 Complete field sources is useful:
Field number 20 Complete field
Insert text here
Insert text here
Arguments for why a KPI Documentation Form is useful: 1.
Insert text here 2.
1. Insert text here
Insert text here
2.
2.
Insert text here
3. Insert text here
Insert text here 3.
3.
 Templates & Reports
Performance Scorecard Initiative Description

Initiative Description

Unique identification
Initiative name Conduct quarterly evaluations of the HR department's performance
Performance Scorecard - Human Resource Department Select period July 2011 with other departmental managers
Trend * Results
k Increasing ✓ On or above targets Organisational initiative no. oi1 Departmental initiative no. di1
 Constant R Within tolerance limits Description and allocation
m Decreasing  Under target Description desc1
Perspective / Goal smartKPIs. Standard Previous Current Trend * Target % Target Results Comments
Strategic Objectives / KPIs com # reporting Period Results complete
frequency Results
Customer - 2 Strategic Objectives / 4 KPIs
Maintain high levels of internal customer satisfaction
% HR customer satisfaction with service levels sK2379 Q 58% 51% m 75% 68% R Comments Jul 2011 Organisational area area1 Balanced Scorecard perspective Customer
# Satisfaction of employees with HR services sK2038 Yr 88 90 k 70 129% R Comments Jul 2011 Scope
Ensure high service delivery standards Strategic objective SO1
# Employee complaints resolution timeliness sK1938 M 60 89 k 50 178% R Comments Jul 2011
Current state CS1
% On-time delivery of HR service requests sk2278 M 57% 91% k 60% 152% R Comments Jul 2011
Financial - 3 Strategic Objectives / 5 KPIs Desired state DS1
Provide good value for money to the organisation Expected outputs EO1
% HR operating expense rate sK2046 M 36% 22% m 30% 72% R Comments Jul 2011
# FTEs per HR department FTE sK44 M 24 28 k 30 93% R Comments Jul 2011
Seek efficiencies to minimise cost base Measurement
$ Cost per hire sK49 M 333.00 598.00 k 350.00 171% R Comments Jul 2011 KPIs KPI1
$ Cost avoidance savings sK262 M 834.00 875.00 k 500.00 175% ✓ Comments Jul 2011
Current result CR1 Target result TR1
Maintain financial rigour in budget projection and execution
% HR budget variance sK479 M 5% -2% m 2% -124% R Comments Jul 2011 Initiative administration
Internal Processes - 2 Strategic Objectives / 5 KPIs Initiative owner (title) IO1 Initiative coordinator (title) ICT1
Optimize recruitment and retention
Initiative owner ION1 Initiative coordinator ICN1
# Open requisitions sK241 Q 2 18 k 12 150% ✓ Comments Jul 2011
Budget $50,000 Budget source BS1
# Time to fill a vacant position sK688 M 17 23 k 15 153% R Comments Jul 2011
Priority High Status Proposed
% HR performance appraisals completed on time sK769 M 97% 40% m 60% 67%  Comments Jul 2011
Improve HR service delivery capability Implementation details
% HR projects on time, on budget and according to specifications sk2863 M 41% 64% k 60% 106% R Comments Jul 2011
Start date date1 End date dateE1
% HR processes optimised sk2284 M 98% 46% m 60% 76%  Comments Jul 2011
People, Learning & Growth - 3 Strategic Objectives / 6 KPIs
Major activities MA1
Build an environment that fosters creativity and innovation
# HR employee engagement index sK1836 Q 55 58 k 65 89% R Comments Jul 2011

# Ideas for new / improved service from HR employees sK4657 M 14 42 k 30 140% ✓ Comments Jul 2011
Develop workforce skills and competences
# Certifications per HR employee sK4659 Q 1.06 1.38 k 2.00 69% R Comments Jul 2011 Risk profile RP1
# Training hours per HR full time equivalent (FTE) sK7 M 5 16 k 8 200%  Comments Jul 2011
Maintain high performing motivated employees
% HR employee satisfaction sk5912 Q 63% 78% k 60% 131% R Comments Jul 2011
% HR employee turnover sK1 M 0% 7% k 5% 143% ✓ Comments Jul 2011
Interdependencies IDP1
* Trend = current vs. previous month results Data not available due to measure being inactive

Helicopter view business statistics Previous Current Trend Other comments

month month
Human Resources - Snapshot 20 KPIs tracked in the scorecard with targets
k
Comments
# HR team members 149 150 Min 1 KPIs for each objective
# Employees 1,224 1,223 m 4 Metrics monitored as statistics
comments1
# HR service requests received 1,592 1,594 k
$ HR Budget ('000) 992 995 k
Templates & Reports
Human Resources Performance Dashboard
Period Nov 2011

Recruitment Retention
# Employment brand strength % Staffing rate Target % New hire failure Target
# Employee tenure # Average time to
38% 37% 34%
Q4 11 87 99% 28% promotion
Q3 11 66 82% 89% 66% 74% 86% 80% 88% 76% 25% 22% 22% 22%
Q2 11 64 56% 72% 56% 67% 15% 11%
8% 3% 6%
Q1 11 81
0 Q4 11 2
0 Q4 11 4
0 Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov
Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Q3 11 4 Q3 11
2010 2011 4
0 2010 2011 Q2 11 3 Q2 11 3
Q1 11 5 Q1 11 2
0 50 100
% Job offer acceptance rate % Employee turnover Target 0 0
# Applicant ratio Target
Q4 11 0 0
83%
Q3 11 65% 10 9 10% 9% 0 0
Q2 11 91% 8
6 7 6 7 7 8 8% 8% 9% 0
4 5% 4% 5% 6% 0
Q1 11 55% 3 3 3% 4% 4%
0% 1 1% 0 2 4 6
0% 0 2 4 6
0% Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov
0% 2010 2011 2010 2011
0% 50% 100%

Workforce Profile
% Succession plans for key positions Target # Management-to-staff ratio # Certifications per employee Target
% Accession rate Target
0.24 2 2 2
19% 17% 9% 10% 9% 9% 10% 0.19 0.20
0.14 0.13 1 2 2 2 2 1 2
14% 12% 14% 12% 10% 14% 6% 7% 7% 6% 0.09 0.05 0.09 1 1 1
9% 3% 2% 4% 0.02 0.05 0.01 0.04 0.04
7% 0%
3% 4%
0%
Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov
Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov 2010 2011 2010 2011 2010 2011
2010 2011
Efficiency and Effectiveness
$ Human capital value added $ Overtime expense per full time equivalent (FTE)
% Human Capital Return on Investment (ROI) # Headcount
129 140 143
106 101 110 112 118 102 104 116

1,508

1,494
1,474

1,446
1,406
102 106

1,255

1,192

783

761
1,086

729
1,063

710
708

685

669

649
553

400
154%180%111%104%190%177%150%162%108%171%198%151%130%

240
910

182

178
796
779
737
Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov
2010 2011 2010 2011 2010 2011 2010 2011

Compensation Working Environment Talent Development Performance

% Unscheduled absence rate Target % Performance appraisals completed on time Target
# Compensation satisfaction # Employee engagement
$ Bonus payout 76% 60% 85% 73% 72% 72% 68% 82% 61% 71%
index index 1 51% 68% 67%
7,669

7,049

20% 15% 18% 13% 20%

9% 16% 2%
5,920
72 76 73 3% 10% 7%
12%
5,181

80 9000 2% Q4 11 75
56 0
60 6000 Q3 11 71
40 # Lost time injury frequency rate (LTIFR) Target Q2 11 50 % Training penetration rate Target
3000 Q1 11 87% 74% 84% 86% 80% 79%
76 73% 76%
0
0
0
0

20 0 0 0 0 0 1.3 1.4 1 53% 55% 54% 67% 59%

1.0 1.1 0.7 1.2 1.1 1.1 1.0 0.8 0.8 1.1 0.8 0
0 0 0.5
0
0 0
Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov
2010 2011 0 50 100 2010 2011

$ Average hourly # Entry level wage to local # Employee advocacy for the $ Training investment per % Training return on
# Employee advocacy for # Employee satisfaction
compensation rate minimum wage organization as an employer full time equivalent (FTE) investment
1.3 1.2 1.3 products and services

4,529
1.4 1.1

4,460
120 100

95%
1.2

93%
Q4 11 75

2,894
100

2,832
61 1
54 59 Q4 11

61%
80 0.8 5 Q4 11 Q3 11 68 5000 1

52%
6
60 0.6 Q3 11 8 Q3 11 9 Q2 11 89 4000 0.8
40 0 0 0 0 0.4 0.0 0.0 0.0 0.0 Q2 11 3 Q2 11 5 Q1 11 83 3000 0.6
20 0.2 2000 0.4

0%
0%
0%
0%
0 0 Q1 11 8 Q1 11 4 0 0.2
0 1000

0
0
0
0
0 0 0 0
0 0
0 0 0
0 0 0
0 5 10 0 5 10 0 50 100
 Action Plan

CERTIFIED KPI PROFESSIONAL

Action plan

Conduct the following two assessments to identify the current level of maturity of your organization's
performance management system:

• Performance Measurement Maturity Assessment*

• Performance Management Maturity Assessment*
*Trademark assessments of The Global Performance Audit Unit, powered by The KPI Institute

Based on the findings of the assessment, complete the template below of an action plan. The number of
sections included in the template below is just for reference. Feel free to add any sections that you may
need to complete a full action plan to improve your performance management system.
No. Initiative no. 3 Actions to be made
Evolution of data Enhance the data analysis using advaced data interpretation methods to
No. Initiative no. 1 Actions to be made visualization generate root-cause analysis and dicision making models.
Optimization of operational Develop competency framework for operation 1
PMS and KPIs based on
scorecard
Review the lifecycle of the current KPIs Develop dashboards on both corporate and departmental levels.
Align,select and cascade KPIs and targets based on the company and
1 operation scorecards (insert action name here)
Select individual KPIs for managers on operational level.
Standardize documentation across operation department 2 Issue/needs addressed Inadequacy of reports for decision making
Automize the process of PMS and KPIs on SAP
2 Issue/needs addressed Incapacity to achieve the target and meet the objectives 1. Budget for automating the reports.
1. Budget to cover the varience of KPIs compensation if any.
2. Historical data, internal and external benchmarking for required 3 Needed resources 2. IT capabilities
competencies.
3 Needed resources
3. Data custodians 3. sufficient knowledge of data gathering and reporting
4. Internal and external, primary and secondary KPIs sources
5. Top Management support 1. Performance management team
1. Performance Manager
2. Operations departments' heads (Branches & Sales) 2. Department heads
3. Data custodians
4 Persons involved
4. HRBPs 3. Data custodians
5. KPIs owners 4 Persons involved
6. IT incumbent responsible for SAP 4. HRBPs
5 Time frame Q 1 - 2020
5. KPIs owners
No. Initiative no. 2 Actions to be made
Standardization of PMS and Complete the competency framework to cover all departments 6. IT incumbent responsible for SAP & HR initiatives
KPIs across departments Develop and document departmental scorecards
Select and balance departmental KPIs 5 Time frame Q4 - 2020
Cascade objectives and KPIs to managerial level corporate wide
1
Select and train a team of data custodians, ensure proper data gathering
and reporting
Develop comprehensive corporate PMS manual Describe for each initiative, the desired results and what is the reality you envision.
Standardize the documentation of the KPIs across the company
2 Inability to measure the departments’ contributions to the strategic
Issue/needs addressed objectives and addressing the areas of development. 1. Desired results: Align the operations objective and KPIs.
1. Budget to finance the compensation of KPIs. 1. 2. Reality envision: Easily identify the performance gaps.
2. Performance management team
3. Data custodians team accross departments
3 Needed resources 4. historical data, external and internal benchmarking of competencies
required.
1. Desired results: Establish governance of PMS.
5. Internal, external, primary and secondary data for KPIs
6. Top management support
2. 2. Reality envision: Make everyone accountable for his/her performance and contribution of overall
1. Performance management team
2. Department heads
success.
3. Data custodians
4 Persons involved
4. HRBPs 1. Desired results: Facilitate decision making.
5. KPIs owners
6. IT incumbent responsible for SAP
3. 2. Reality envision: Monitor the performance and take the proper corrective actions.
5 Time frame Q3 - 2020
Thank You ☺