KPI - from the beginning

1. The top-level KPIs should be developed and communicated by top management, in my opinion. From there, KPIs trickle down so that departments can show the KPIs impact their plans and how their process outputs support the overall KPIs laid out by top management.

2. You can divide KPIs any way that you would like...although I'm not sure where you wish to go with this. Some are financial...some are operational...some are safety...and so on...but they are all organizational.

3. Your KPIs are specific to your organization and your strategic objectives.

4. While I do have a template that I can readily share, you can develop a simple spreadsheet to show:

• Name of KPI
• Unit of measure
• Target/Goal
• Good direction - An arrow to show which way is preferred (example : Customer complaints - you want a down arrow, because a lower number is better. For on-time delivery, you want an up arrow, because the more you are on-time, the better)
• Measuring frequency - monthly or yearly or weekly or daily or quarterly or whatever your top management sets out
• Spots to record the actual results (and then you can colour code it to quickly show if the results have met the target/goal)

 

I apply the SMART method when setting objectives, which includes establishing how to Measure whether or not the organization is on track achieve the objective.

For example, if the objective is "A 10% reduction in customer complaints by December 31, 2017", my KPI would be customer complaints.

 

Achievable means that a company has understood the goal that they are setting AND determined/allocated the resources to make it...well...achievable. Simply throwing a target out there with no plan on how to achieve it is not SMART goal, but simply a wish.

No one, no process, no organization is perfect. Defects happen. By setting a target of 0 defects, you run the risk of people failing to report defects or failures. It's like the safety measure of near misses - no one WANTS a near miss, but it's better to know when/where they happen so that action can potentially be taken to avoid something worse from happening.

You WANT defects to be reported internally and contained/controlled, in order to avoid a larger issue such as a customer complaint or worse, a full product recall, from happening.

 

I've been watching a number of discussions about KPIs and it seems to me that there's more interest in adopting a KPI for it's own sake, rather than understand the application of performance indicators to the achievement of objectives set for business process performance.

Firstly, we must go back to basics and embrace simple concepts like "right first time" and "on time". Pretty much ALL business processes can be considered this way and then have objectives applied to them for the purpose of measuring performance. Take process like maintenance, quote preparation, product design, manufacturing etc. can all be measured against these basics and then objectives developed such as First Time Through of 95% and so on.