Cracking KPIs for Your Organization Infographic

Cracking KPIs For Your Organization. Key Performance Indicators, KPIs, help leaders evaluate success by quantifying goals and performance over time. This infographic explains what KPIs are and how to use them effectively. KPIs add value through, [1] Clarity. They give a clear picture of an organization’s strategy. Focus. They pinpoint what matters most or needs most attention. Improvement. They help to monitor improvement to reach required standards. Top organizational challenges in using KPIs are. [2] Choosing the right KPIs in the first place, fifty six percent. measuring the KPIs themselves, seventeen percent. identifying what actions are needed to improve performance, seventeen percent. having too many KPIs, five percent. effectively communicating performance progress, five percent. How to crack KPIs in five steps. When it comes to setting KPIs remember. you can’t manage what you don’t measure. When developing your KPIs, remember to keep them SMART. [3] Specific. Be really clear about what each KPI will measure and link them to your organization’s strategic objectives. Measurable. KPIs must be measurable to a defined standard or percentage of growth. Achievable. The standard or percentage growth must be achievable. Relevant. KPI must actively measure something which matters and contributes to improved performance.Time bound. KPIs should be achievable within a clear time frame. Examples of SMART KPIs. Increase our customer base by fifteen percent market share by Quarter two end under Sales Director leadership. Maintain a positive corporate reputation with customers, potential customers, the press and general public. So which KPIs are best. It is important to choose a KPI which will measure the right activity for each area of a business. Here are some examples of different KPIs and how they are measured. Financial, Net profit. How is it calculated. Total revenue minus total expenses. How is it presented. Expressed as an amount of currency. Key points. The higher the value the better the performance. Sales. How is it calculated. Conversion rate Number of sales divided by number of opportunities x 100. How is it presented. Expressed as a percentage. Key points. The higher the percentage, the more effective the sales team. Customer service. Customer satisfaction How is it calculated. By a customer survey. How is it presented. Expressed as a percentage. Key points. Used as a measure or benchmark of service quality. Technology, Average IT spend per employee. How is it calculated. Cost of IT services divided by number of employees. How is it presented. Expressed as an average amount per employee. Key points. Often used by organization to benchmark their IT spending. Three tips to get more from your KPIs. Don’t go KPI crazy. Stick to between four and ten KPIs for your organization. [4] Capture KPI information effectively. Think about, what it is you need to measure. whether a data collection system would help. who will collect the data. how frequently data will be collected, daily, weekly, monthly,quarterly etc. how you will verify the data. Communicate your KPIs clearly. Ensure managers know how each KPI relates to their area and what activities they need to focus on. KPIs in practice. Consider use of a balanced scorecard or performance dashboard to present and interpret results. For example, a traffic light system can help define performance standards where, Red equals Problematic performance. High risk, serious performance concerns which threaten overall performance. Amber Red equals Mixed performance. Medium risk, some significant performance concerns, potentially damaging. Amber Green equals Satisfactory performance. Some concerns but broadly on track. Green equals Good performance. Low risk, on track performance, no action needed. Final tip. Review your KPIs regularly to ensure they remain consistent with your strategy, goals and priorities.

References
[1] Diana Almasan, Key Performance Indicators Infographic. 9 April 2014. Available at: http://kpiinstitute.org/key-performance-indicators-infographic/ (accessed 8 January 2015).
[2] Dan French, Leading Indicators: What’s So Key About Your KPIs. Consider Solutions Report 2013. Available at: www.consider.biz/wp-content/uploads/2014/01/Leading-indicators-what-s-so-key-about-your-kpis.pdf (accessed 8 January 2015).
[3] Leadlight Technologies, The KPI SMART Rule. Available at: www.lltcorp.com/content/kpi-s-m-r-t-rule (accessed 8 January 2015).
[4] PriceWaterhouseCoopers, A Guide to Key Performance Indicators: Communicating the Measures That Matter, (June 2006). Available at: http://www.pwc.com/gx.en/corporate-reporting/assets/pdfs/uk_kpi_guide.pdf (accessed 8 January 2015).

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