KPIs and Benchmarking
KPIs
Once an organisation or a person has analysed its mission, defined its goals and identified all its stakeholders it needs a way to measure progress toward those goals. Key Performance Indications are those measurements.
For KPIs to work, you need to ensure the KPIs are specific and measurable. The test is whether you can graph the results, if you can you probably have a good KPI.
Depending on whether you are an organisation, person or process you need to identify the key elements. With an organisation you could use Marketing, Operations, Innovation, Human Resource and Finance. With a person it could be Social, Family, Health, Mental, Finance and Philosophy.
You need to then brainstorm the potential KPIs that could be used in each key element. Many things are measurable, that does not make them the key to the organisation's or your success. In selecting KPIs it is critical to limit them to those factors that are essential to the organisation or yourself, reaching its goals. For example for Marketing, the contenders are -
- Market share per product group
- Market growth
- Customer satisfaction
You may find you have as many as 20 or 30 KPIs, your next task is to select two or three that will become the key drivers for your project. You need to consider factors such as ease of measurement, relevance to the process, availability of historical data and ability to be understood by the group. Remember that many things are measurable and fit the above factors but are not essential to the organisation or yourself reaching its goal. For example a school may use a KPI based on the pass rates of its students as a key driver.
Take the two to three KPI's you have selected and draw a graph which shows how the performance has been in the past and the target performance in the future. A simple line graph is usually the best format to use.
Link all the activities into each KPI. The group need to understands how and what they are doing drives into a KPI.
Make sure there is a regular updating and reporting on each KPI. Make KPIs part of the culture of your client organisation. You can use KPIs as a performance management tool by giving everyone in the organisation a clear picture of what is important and what they need to do to make it happen. Make sure that everything they do is focused on meeting or exceeding those KPIs. You may also consider using a reward system for the meeting or exceeding of KPIs.
Benchmarking
Benchmarking is a tool to help you improve your business processes. Any business process can be benchmarked.
Many organisations talk about benchmarking but few actually do it. It is important for you to understand the basics of benchmarking and to be able to explain how your client can take advantage of the process.
What is Benchmarking? Robert Robert Camp defines Benchmarking as the "search for industry best practices that lead to superior performance".
Put simply it is the process of identifying, understanding and adapting outstanding best practices and high performance from organisations anywhere in the world and then measuring actual business processes against your organisation to help it improve its performance.
In Summary what will you find out by benchmarking?
- Who performs Best Practice or Business Excellence and has processes that are adaptable to you own organisation
- Who is the most compatible for you to benchmark against
Most business processes are common throughout industry and one of the mistakes people can make when benchmarking is to only look at their own industry group or 'back yard'. For example Toyota has the same fundamental Human Resource requirements for recruitment and staff training as an accounting firm, so look at benchmarking a company that is well known for being a good model.
More information?
Geoff Missen, FCA
Director
e gmissen@mbapartnership.com.au
t 07 5557 8700