Key Performance Indicators (KPIs)

www.optimumfx.com

Intent of session

• Key Performance Indicators measure the organisational performances that are most critical for the current and future success of an organisation

• The session will provide an outline of the types of KPI’s available and the pros and cons of each

• KPIs are a key tool for a leader to help make decisions and guide their teams back on track

Defining KPIs

• KPIs measure the performance of an going process to achieve a goal or target.

• The KPI must be an indicator to measure the current and future success of the organisation.

• A KPI must be understood by all staff and everyone must know what corrective action to take. This corrective action must impact the KPI.

• KPIs must be defined using SMART objectives.

Types of KPIsA company usually has a mixture of the following types of KPIs:

• Lag Indicators (Outcome measures) tell how well a system performed

– This does very little to define appropriate corrective action required as the measure could be old

• Period financial performance – lag to – financial control (and others)• Short term absenteeism – lag to – employee motivation

• Lead Indicators (Performance drivers) help predict performance– Difficult to define, measure and get accurate.

• Employee motivation – lead to – Customer satisfaction• Management review compliance and effectiveness – lead to – performance improvement

• Current Indicators measures performance as it occurs– Care should be taken to understand that instant results does not lead to instant

reactions causing adverse conditions.

Application of KPIs

• A good scorecard often has a combination of current, lead and lag KPI’s

• The overall purpose for selecting metrics is to enable you to track performance towards your goals – selecting the most appropriate ones is key

• Remember the old saying: – ‘Show me how you’ll measure me, I’ll tell you how I’ll perform’