KPIs (or how to improve the control of your organisation) vol. II

In the first article of this series on KPIs we established the basic concepts regarding this subject: What are they? Why are they useful? What types are there? In this article, we will set forth the necessary processes for designing and implementing them.

The steps to follow for implementing KPIs in our organizations are the following.

1. Clearly establish the organisational processes.

If we do not have these defined, this must be done now. If they are not sufficiently defined, they must be better defined. If they are already well defined, we simply need to have them clearly written down.

2. Establish the goals of the organisation.

If we do not have goals, we will go nowhere. We should define them clearly.

3. Identify the indicators.

Now comes the moment when, as we match processes with goals, we look to discover what numbers, which statistics, what data is in play when these processes are activated and of all of these, which are likely to affect the goals. Said another way, if we have a production chain, we have indicators available to us such as the number of units produced per day, the number of production delays occurring per day, etc. Will any of these have a semi-direct effect on any of the organizational goals that we have? Perhaps yes. Perhaps we will find that the fewer delays per day we have, the greater our monthly profits are. Or if more units are produced per day, the faster orders can be delivered which, in turn, leads to a higher degree of customer satisfaction.

4. Establish values.

Now comes the time to take the plunge and commit to a number for those indicators we have selected. How many units do we need to produce per day to make it so that customer satisfaction never goes below 80% in absolute terms? What is the maximum amount of production delays per day permissible so that our monthly profits clearly increase?

5. Monitor.

Now we have everything ready, we only need to periodically collect the information that these indicators give us so we can analyse them and then, when they are all combined in a spreadsheet, analyse them in order to draw conclusions.

6. Adjust / Plan again.

With the information and knowledge acquired in the previous step, now we need to decide what changes we should make to redirect our efforts, if we see that this is necessary.

In this way, we complete the process and in doing so obtain greater control over our work and over the relationship between what we do and what we achieve.

[salto]

Marc Ambit – Consultant and teacher at TBS Barcelona Campus

Tags: KPIs|management|project management