The five stages of KPI implementation

The five stages of KPI implementation

I have written many posts about Key Performance Indicators (KPIs) and KPI implementation, and it’s something that can fill people with horror, and engender visions of grey people lurking around corners with clipboards.  In reality, of course, it’s not about Big Brother, but KPI implementation can give you real visibility of what’s happening in your business.

If you don’t know how to get started, then this five-point list may help:

Decide what you want to measure

You need to have a goal in mind, obviously, so it may be to cut costs, save time, increase sales, become more efficient – whatever.  Let’s assume here that you want to reduce the number of people telephoning your customer service desk, so that becomes your goal.

Decide what will determine success and failure

Obviously, given our goal, the sign of success will be fewer calls, and the sign of failure will be more, increasingly agitated, calls!  However, we need to be a bit more specific, and goals and the criteria for success must be measurable – otherwise none of the subsequent steps will work!

A good rule is to always have a quantity and a timeframe in any goal or success criteria.  So in our example here, we might say “I want to reduce customer service calls by 10% within three months.”  So now we have a clear goal, and a clear set of criteria for success or failure.

Create and implement the KPI

The KPI itself needs to be a measure that relates to the goal, so in this case it’s obviously the number of calls taken on a daily basis.  You may want to summarise this information each week, and compare it with the previous week, so you have an indication of progress toward the goal.

Measure the performance

You need to do this, because it gives you a progress report, as it were, of how you are doing.  For example, if you are one month into your three month timeframe and nothing has changed, you can still potentially salvage the goal by putting some other process into place.

Report and analyse the results

This is the outcome of the exercise, and in our example here, it will simply consist of a report stating that calls have been reduced by a certain amount, and this will either have met the target, or not!  Nice and easy, in this case, but with the concept of continual improvement in mind, you may want to go around again and set another goal.

Of course, the analysis of this metric can help you analyse other aspects of the business – it isn’t just stand-alone.  Clearly, in order to reduce customer service calls, you must have an alternative; people don’t just stop ringing because you’re counting their calls!  So the reasons may include improved service, so fewer complaints, or perhaps customers are having their queries answered elsewhere by another initiative you have put in place – something on the website perhaps.

So, although we have looked at a very simple example, you can easily imagine a more complex goal.  If your aim was to increase traffic to your website, for example, you may have several criteria for success – more visits, more conversion, more blog comments, more orders etc.  Each of these criteria might in turn have more than one KPI associated with them, so the process of measuring, reporting and analysing becomes much more integral.

So the sixth step is to do something with this information, but that’s for another day!

Please talk to me if you are wanting to look at KPI implementation in your business, call me on 01438 832724 or fill in the contact form here.

4 Comments
  1. The first paragraph gave me a belly laugh – as I look at y my tracking system for activities which is comprehensive.

    We can control input to control output. I find it useful to have the workers track input and have management track output.

    You hinted at this in your post. For instance, a financial advisor can prevent customer service calls by contacting their clients monthly or on whatever cycle works for each cycle.

    Have a simple daily tracking card with number: 1 2 3 4 5 6 7 8. Put an X through each number when the call is made. Turn in the card to management at the end of the day.

    Management should insist on the required number of outgoing calls. Then they can make a scattergram with cause on the X-axis and effect on the Y axis.

    Gershon
    http://48statehike.blogspot.com

    1. Yes – proactive activity can be the best way to avoid service issues. Not only by the regular contact that you mention, but also by calling up in advance of a problem.

      In my experience, if you call someone and tell them that their order has been delayed, in 90% of cases they will be fine about it. If they have to call you to find out where their order is, then 90% of them will not be impressed!

  2. I am a measurement and analysis nerd, even though I’ve never been in project management per se, much of my (non-Hikercise) work has been about helping businesses be ‘better’ or ‘bigger’. ‘Better’ businesses always measure both qualitatively and quantitatively – the former being harder than the latter. The only thing about KPI’s that makes me shudder these days is your picture – I never liked the measurement set when applied to individuals – I always found it a little dehumanising. But ‘opportunity for improvement’ made me laugh and wasn’t much better than Below Expectations. And while there’s hairdye I shall never be grey!

    1. Thanks Jenny – you’re right about the image, but it proved challenging to find one that expressed KPIs. I suppose that’s not too surprising really!

      I think that people can be measured indirectly by their contribution to the business processes that you are measuring explicitly. For me, taking (and being given) ownership and responsibility is a large part of being successful as a team member.

      I find that some business owners can over-supervise (or micro-manage, if you prefer) and this can be counter-productive. If you give someone a chance to use their initiative they will generally respond well and, if they don’t, you will know their limitations in the future.

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