
Key Performance Indicators
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Key Performance Indicators (KPIs) help define and measure the organizational goals which are fundamental to an organization's current and future success. Having solid KPIs is crucial for companies that are implementing performance management systems, such as balanced scorecards, six sigma, or activity-based management. In many organizations, KPIs are often too numerous, randomly assembled, and overly complex--essentially rendering them ineffectual, or at worse, counterproductive. Key Performance Indicators provides a model for simplifying the complex areas of KPIs while helping organizations avoid common mistakes and hazards.
Now in its fourth edition, this bestselling guide has been extensively revised and updated to incorporate practical lessons drawn from major implementations. Fresh content includes a more concise KPI methodology with clear implementation guidance, original insights on how other areas of performance management can be corrected, and new in-depth case studies. A revised starter kit is included to identify critical success factors, and the KPI resource kit contains updated worksheets, workshop programs, and questionnaires. Helping readers to better define and measure progress toward goals, this important guide:
* Dispels the myths of performance measurement and explains a simple, yet powerful KPI methodology
* Explains the 12-step model for developing and using KPIs with guidelines
* Helps readers brainstorm performance measures, sell KPI projects to the Board and senior management, and accurately report performance
* Features the "KPI Project Leaders Corner" which provides readers with essential information and useful exercises
* Includes an array of practical tools--templates, checklists, performance measures--and a companion website (www.davidparmenter.com)
Key Performance Indicators: Developing, Implementing, and Using Winning KPIs, 4th Edition is important resource for C-suite executives, senior management, project teams, external project facilitators, and team coordinators involved in all aspects of performance management systems.
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Content
- Cover
- Title Page
- Copyright
- Contents
- About the Author
- Acknowledgments
- Introduction
- Why You Should Be Interested in This Book
- Unintended Behavior: The Dark Side of Performance Measures
- Some Common Measures to Avoid
- The Three Major Benefits of Ascertaining an Organization's Critical Success Factors
- A Clarity of Purpose from Aligning the Daily Staff Actions to the Organization's Critical Success Factors
- Improving Performance through Having Fewer and More Meaningful Measures
- Creating Wider Ownership, Empowerment, and Fulfillment in All Levels of the Organization
- The Burning Platform in Performance Management
- Reference Reading Offering Workable Solutions
- No Formal Education on Performance Measurement
- Confusion on What KPIs Are and What They Can and Should Do
- Too Many of the Wrong Measures
- Measuring Far Too Much at the Bottom of the Cliff
- Calling All Measures KPIs
- Linking Measures to Performance Pay Schemes
- Using External Consultants to Deliver a KPI or Balanced Scorecard Project
- A Lack of CEO and Senior Management Commitment to KPIs
- Operating without Ascertaining the Organization's Critical Success Factors
- Allowing Short-Term Thinking to Override the Greater Good
- A Failure Rate with Projects That Matches the Failure Rate of Race Horse Ownership
- Setting Annual Targets When You Cannot See into the Future
- Suggested Chapter Reading by Reader Designation
- Why Owners of My Previous Editions Should Buy the Fourth Edition
- PDF Toolkit
- Notes
- Chapter 1 The Great KPI Misunderstanding
- The Four Types of Performance Measures
- Key Result Indicators
- Result Indicators
- Key Performance Indicators
- Performance Indicators
- Number of Measures Required: The 10/80/10 Rule
- Difference between KRIs and KPIs and RIs and PIs
- The Lead and Lag Confusion
- Have a Mix of 60 Percent Past, 20 Percent Current, and 20 Percent Future-Oriented Measures
- Importance of Timely Measurement
- Where Are You in Your Journey with Performance Measures?
- Notes
- Chapter 2 The Myths of Performance Measurement
- The Myths Surrounding Performance Measures
- Myth #1: Most Measures Lead to Better Performance
- Myth #2: All Measures Can Work Successfully in Any Organization, at Any Time
- Myth #3: All Performance Measures Are KPIs
- Myth #4: By Tying KPIs to Remuneration You Will Increase Performance
- Myth #5: We Can Set Relevant Year-End Targets
- Myth #6: Measuring Performance Is Relatively Simple, and the Appropriate Measures Are Obvious
- Myth #7: KPIs Are Financial and Nonfinancial Indicators
- Myth #8: You Can Delegate a KPI Project to a Consulting Firm
- The Myths around the Balanced Scorecard
- BSC Myth #1: The Balanced Scorecard Was First Off the Blocks
- BSC Myth #2: There Are Only Four Balanced Scorecard Perspectives
- BSC Myth #3: The Balanced Scorecard Can Report Progress to Both Management and the Board
- BSC Myth #4: Measures Fit Neatly into One Balanced Scorecard Perspective
- BSC Myth #5: Indicators Are Either Lead (Performance Driver) or Lag (Outcome) Indicators
- BSC Myth #6: "Cause and Effect" Strategy Mapping Is a Valid Process
- BSC Myth #7: Measures Are Cascaded Down the Organization
- BSC Myth #8: Performance Measures Are Mainly Used to Help Manage Implementation of Strategic Initiatives
- Notes
- Chapter 3 Background to the Winning KPI Methodology
- Winning KPI Methodology
- The Original 12-Step Process
- The Three-Stage Winning KPIs Process
- An Overview of the Three Stages
- Seven Foundation Stones of the Winning KPIs Process
- "Partnership with the Staff, Unions, and Third Parties" Foundation Stone
- "Transfer of Power to the Front Line" Foundation Stone
- "Measure and Report Only What Matters" Foundation Stone
- "Source All KPIs from the Organization's Critical Success Factors" Foundation Stone
- "Abandon Processes That Do Not Deliver" Foundation Stone
- "Appointment of a Home-Grown KPI Team Leader" Foundation Stone
- "Organization-Wide Understanding of the Winning KPIs Definition" Foundation Stone
- Implementation Variations and Shortcuts for Small to Medium-Sized Enterprises
- Implementing the Winning KPI Methodology in a Small to Medium-Sized Enterprise (100-250 Employees)
- Implementing the Winning KPI Methodology in a Small Enterprise with Less than 100 Employees
- Notes
- Chapter 4 Leading and Selling the Change
- Steve Zaffron and Dave Logan: Why So Many Initiatives Fail
- Harry Mills: The Importance of Self-Persuasion
- John Kotter: How to Lead Change Successfully
- Learn to Sell by Appreciating the Emotional Drivers of the Buyer
- Selling the KPI Project
- Task 1. Obtain Public Relations Support for the Project
- Task 2. Prepare Your Elevator Speech
- Task 3. Selling the Need for a One-Day Focus Group Workshop
- Task 4. Hold a Focus Group Workshop
- Task 5. Prepare a Comprehensive CSF and KPI Project Blueprint
- Task 6. Presell the CSFs and Winning KPIs Project
- Task 7. Deliver a Compelling Presentation to the CEO to Seek Project Approval
- Selling the Winning KPIs to the Organization's Staff
- Task 1. Survey a Cross-Section of Staff
- Task 2. Utilize the Feedback from Employee Survey
- Task 3. Build a Compelling Case for Change
- Task 4. Use the Project's Vision Statement to Attract the Staff
- Task 5. "Selling the Concept" Road Show
- Task 6. Maintain Ongoing Communication
- Task 7. Empower Broad-Based Action
- Delivering Bulletproof PowerPoint Presentations
- PDF Download
- Notes
- Chapter 5 Getting the CEO and Senior Management Committed to the Change
- CEO and Senior Management Commitment
- Task 1. Prepare and Practice Your Elevator Speech to Get the Senior Management's Attention
- Task 2. Selling the Need for External and Internal Mentor Support for the KPI team
- Task 3. Appointment of an External Facilitator
- Task 4. Obtain the Green Light to Run the Critical Success Factors Workshop
- Task 5. Agree on the Initial Timing, Resources, and Approach
- Task 6. Ascertain What Needs to Be Abandoned to Make Room for the KPI Project
- Task 7. Ascertain the Existing Measurement Culture
- Task 8. Decide How the KPI Project Will Be Rolled Out
- Task 9. Reporting Progress to Maintain the Senior Management Team's Engagement
- Guidelines for the External KPI Facilitator
- External Facilitator's Involvement in The KPI Project
- Checklist of the External Facilitator's Role
- PDF Download
- Notes
- Chapter 6 Up-Skill In-House Resources to Manage the KPI Project
- Establishing a Winning KPI Project Team
- Task 1. Select the In-House KPI Team
- Task 2. Full-Time Commitment of KPI Project Team
- Task 3. Facilitator Helps Train the KPI Project Team
- Task 4. Research for The KPI Team (Key Reference Books and Websites)
- Task 5. Establish a Just-Do-It Culture and Process
- Task 6. The KPI Project Leader Needs a Cluster of Mentors
- Task 7. Finalize a strategy for the KPI project rollout
- Task 8. Determining the Perspectives of Measurement
- Task 9. The KPI Project Team Needs to Keep Close to the Fundamentals
- PDF Download
- Notes
- Chapter 7 Finding Your Organization's Critical Success Factors
- Why Critical Success Factors Are So Important
- Operational Critical Success Factors: The Missing Link
- What Influences the Critical Success Factors?
- Operational Critical Success Factors Are the Source of All Meaningful Performance Measures
- Relationship between Critical Success Factors and Strategy
- Distinguishing between Critical Success Factors and External Outcomes
- The Benefits of Understanding Your Organization's CSFs
- Relationship between CSFs and KPIs
- Common Misunderstandings
- Task 1: Wording the Success Factors and the External Outcomes
- Implementation Tips
- Task 2: Determining the Critical Success Factors in a Two-Day Workshop
- Agree on What Approach to Use
- Agree on Who Should Attend
- Agree on Content and Process
- Finalize the Wording of the Success Factors and External Outcomes
- Finding the Operational CSFs through a "Sphere of Influence" Mapping Process
- Testing the Operational CSFs
- Selection of the Critical Success Factors Is a Very Subjective Exercise
- Implementation Tips
- Task 3: Presenting the Critical Success Factors to the Staff
- Task 4: Get the CSFs on the Wall in Every Workplace
- PDF Download
- Notes
- Chapter 8 Characteristics of Meaningful Measures
- Common Measurement Traps
- Wisdom on Measures from Other Authors
- Rules for Designing Measures
- Suggested Exercises to Improve Measure Design
- Rewording of Measures
- Rewording of Measures Exercise
- Looking for Measures with a Negative Cost-versus-Benefit Relationship
- Exercise to Categorize Measures
- PDF Download
- Chapter 9 Designing and Refining Measures
- Running the Two-Day Performance Measures Workshop
- Task 1. Workshop Planning
- Task 2. Set Up a Database to Record the Performance Measures
- Task 3. Outline the Winning KPI Methodology
- Task 4. Train Attendees to Derive Measures from the CSFs
- Task 5. Show How to Word Measures Properly
- Task 6. Achieve a Mix of Past, Current, and Future-Looking Measures
- Task 7. Recording All Measures Collected from the Workshop Sessions in a Database
- Task 8. Removal of Duplicated Measures
- Task 9. Introduce a Moratorium on Measures Being Developed Outside the KPI Project
- Refining Performance Measures after the Workshops
- Tidying Up the Performance Measures Post Workshop
- Holding a Performance Measures Gallery to Weed Out Dysfunctional Measures
- Teams Select Their Relevant Performance Measures
- Why Team Performance Measures Are Linked to the CSFs
- Task 1. Train All Teams to Use the Database
- Task 2. Never Lose Sight of Team Ownership
- Task 3. A Maximum of 10 Performance Measures for a Team
- Finding the KRIs That Need to Be Reported to the Board
- Task 1. Review Graphs Used in Strategic Documents or Previous Board Papers
- Task 2. Review the Critical Success Factors and Outcome Statements
- Task 3. Limit the KRIs to No More Than 10
- Task 4. Ensure That the KRIs Impact All the Six BSC Perspectives
- Task 5. Presell the KRIs before Presenting Them to the Board
- The KPI Team Ascertaining the Winning KPIs
- Task 1. Ensure That the KPIs Have All of the KPI Characteristics
- Task 2. Limit the Organization-Wide KPIs to No More Than 10
- Task 3. Test All the KPIs in Three Divisions
- Task 4. Communicate the KPIs to All Staff
- PDF Download
- Note
- Chapter 10 Reporting Performance Measures
- Develop the Reporting Framework at All Levels
- The Common Faults with Reporting
- Designing an Appropriate Reporting Regime
- Task 1. KPI Team to Have Sole Responsibility for Performance Report Design
- Task 2. Get Wide Acceptance of Competent Design Practices
- Task 3. Designing Reports Using Reporting Software
- Task 4. Design Reports That Can Work on a Tablet or Smartphone
- Task 5. Consider Using 4,4,5-Week Reporting Periods for Each Quarter of a Year
- Task 6. Develop a Hierarchy of Reports to Staff, Management, and the Board
- Reporting the KPIs to Management and Staff
- Intraday/Daily Reporting on KPIs
- Intraday Exception Reporting to the Chief Executive Officer on Human Resources Issues
- Weekly KPI Reporting to the CEO
- Reporting RIs and PIs to Management
- Weekly Human Resources Update to CEO
- Weekly/Monthly Updates to Management and CEO
- Reporting Performance Measures to Staff
- Reporting Performance Measures to the Board
- Suggested Graphs for the Board Dashboard
- Reporting Team Performance Measures
- The Performance Reporting Portfolio
- PDF Download
- Notes
- Chapter 11 Ongoing Support and Refinement of KPIs and CSFs
- Facilitate the Ongoing Support and Refinement of KPIs and CSFs
- Task 1. Constantly Support Empowerment of the Frontline Staff
- Task 2. Roll Out KPI Training to Existing and New Staff
- Task 3. Maintain a Constant Focus on John Kotter's Eight-Stage Selling Change Process
- Task 4. Maintain a Constant Focus on Peter Drucker's Abandonment Rule
- Task 5. Review the Organization's CSFs Annually
- Task 6. Hold an Annual One-Day Focus Group to Revisit the Performance Measures
- Task 7. Revisiting the KPIs
- PDF Download
- Chapter 12 Implementation Case Studies and Lessons
- Recent Case Studies
- Private Sector Case Study: Financial Institution
- Private Sector Case Study: Food Distributor
- Previously Reported Case Studies
- Private Sector Case Study #1: An Asian Conglomerate
- Private Sector Case Study #2: Medical Company
- Private Sector Case Study #3: Forestry Company
- Private Sector Case Study #4: Car Manufacturer
- Private Sector Case Study #5: Timber Merchant
- Nonprofit Membership Organization Case Study #1: Golf Club
- Nonprofit Membership Organization Case Study #2: Surf Life Saving
- Government Department Case Study #1
- Government Department Case Study #2
- Professional Accounting Body Case Study
- Charity Case Study
- Implementation Lessons
- Lesson 1: Select a Small KPI Team to Be Full Time on the KPI Project
- Lesson 2: Leading Change the John Kotter Way
- Lesson 3: Start Off with a Six-Perspective Balanced Scorecard (BSC)
- Lesson 4: Focus on the Critical Success Factors
- Lesson 5: Follow the 10/80/10 Rule
- Lesson 6: "Just Do It"
- Lesson 7: Use Existing Systems for the First 12 Months
- Lesson 8: Trap All Performance Measures, Both Existing and New, in a Database and Make Them Available to All Teams
- Lesson 9: KPI Reporting Formats Should Follow the Guidelines of the Data Visualization Experts
- Lesson 10: Embracing Peter Drucker's Abandonment Rule
- Comparison to Other KPI Methodologies
- The Balanced Scorecard
- The Difference between the Balanced Scorecard and Winning KPIs Methodologies
- Have a Balanced Strategy
- Stacey Barr's PuMP Methodology
- PDF Download
- Notes
- Appendix Performance Measures Database
- Index
- EULA
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