1. Key Performance Indicators KPI’s

4. Purposes of (KPI’s) Performance Measurement Systems
Providing direction and support for continuous improvement
Identifying trends and progress
Facilitating understanding of cause-and-effect relationships
Allowing performance comparison to benchmarks
Providing a perspective of the past, present, and future

5. Key Task
In designing a performance measurement system, organizations must consider how the measures will support:
Senior executive performance review
Organizational planning
Address the overall health of the organization, and
How the measures will support daily operations and decision making.

6. Key Issues Organizations need comparative data, such as:
Industry averages
Best competitor performance
As well as world-class benchmarks to gain an accurate assessment of performance and know where they stand relative to competitors and best practices.

8. KPI’s & Shareholder Value
Shareholders invest to make money.
Management invest that money to achieve the objectives of the shareholders.
KPI’s should focus on achieving the objectives of the shareholders but not ignore the other stakeholders.

10. KPI’s Practical Guidelines
Fewer is better.
Link to the key business drivers.
Include a mix of past, present, and future
Address the needs of all stakeholders.
Start at the top and flow down to all levels of employees
Combine multiple indexes into a single index
Change as the environment and strategy changes
Have research-based targets or goals

12. Linkages to Strategy KPI’s Measures and indicators
Key business drivers (key success factors)
Strategies and action plans
KPI’s Measures and indicators

13. KPI’s - Measurements Does the measurement support our mission?
Will the measurement be used to manage change?
Is it important to our customers?
Is it effective in measuring performance?
Is it effective in forecasting results?
Is it easy to understand and simple?

14. Key objective
The things an organization needs to do well to accomplish its vision are often called:
key business drivers or
key success factors.
They represent things that separate an organization from its competition and define strengths to exploit or weaknesses to correct.

15. Key Criteria Good measures and indicators are actionable
They provide the basis for decisions at the level at which they are applied.

16. Customer Measures Customer satisfaction and dissatisfaction
Customer retention
Gains and losses of customers and customer accounts
Customer complaints and warranty claims.

17. Product and Service Measures
Internal quality measurements
Field performance of products
Defect levels
Response times

18. Human Resource Measures
Employee satisfaction
Training and development
Work system performance and effectiveness
Safety
Absenteeism
Turnover of Staff (longevity of employees)

19. Organizational Effectiveness Measures
Cycle times
Production flexibility
Lead times and setup times
Time to market
Product/process yields
Delivery performance
Cost efficiency
Productivity

20. Governance and Social Responsibility Measures
Organizational accountability
Ethical behavior
Regulatory/legal compliance (ISO 9000)
Community service

22. Common Production Quality Measures
Defects per unit of Production
Errors per opportunity
Customer returns
Patient or Customer Waiting Times
Production per employee
Sales per square metre

23. Creating Effective Performance Measures
Identify customers requirements and expectations
Define work processes
Define value-adding activities and process outputs
Develop measures for each key process
Evaluate measures for their usefulness

25. Analyzing and Using Data
Analysis – an examination of facts and data to provide a basis for effective decisions.
Examples
Examining trends and changes in key performance indicators
Making comparisons relative to other business units
Calculating means, standard deviations, and other statistical measures
Seeking to understand relationships among different performance indicators

26. The Cost of Quality (COQ)
COQ – the cost of avoiding poor quality, or incurred as a result of poor quality
Translates defects, errors, etc. into the “language of management” – $$$
Provides a basis for identifying improvement opportunities and success of improvement programs

27. Managing KPI’s and Information
Validity – Does the indicator measure what it says it does?
Reliability – How well does an indicator consistently measure the “true value” of the characteristic?
Accessibility – Do the right people have access to the data?

29. Common Operating Ratios for the Hotel Industry
Average room rate (ADR)
Revenue per available room (RevPAR)
Revenue per available customer (RevPAC)
% room occupancy
Average Food Service Check
Seat Turnover (Covers)

30. Call Centre KPI’s

35. Questions Suggest suitable KPI’s for an airline.
Suggest suitable KPI’s for the retail sector.
Suggest suitable KPI’s for the legal profession.
Suggest suitable KPI’s for schools & colleges.
Suggest suitable KPI’s for a manufacturer.

36. Improving Operational Performance
A Medical Practice – Worked Example

37. Patient Care
Response Times
Clinical Performance
Customer Service

38. Employee Wellbeing Retention Health / Safety / Welfare Satisfaction
Compensation
Recruitment

39. I’m ready for some leisure time.
Bye for now!
I’m ready for some leisure time.
Please ensure you
Prepare for next session 39