10 Essential Techniques To Work With KPIs

Key Performance Indicators (KPIs) are specific pieces of information which when analysed together, enable business leaders and mangers to overview the actual project health. However, it is a daunting and conjuring task to determine which of the performance measuring matrices should be associated with KPIs. KPIs can be both qualitative and quantitative and therefore, sometimes it becomes difficult for higher authorities to set right KPIs to gauge the project performance during a certain time period.

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There are many reasons why KPIs fail to produce desired results such as lack of clarity in their definition, role and most importantly use. Following lines explain ten essential techniques that will help organisations to implement KPIs successfully and make most of them in the long run.

  • Start with an End in Mind:
    KPIs add a lot of value to any organisation because they enable it to work in a better way and move smoothly towards achieving organisational goals. Therefore, all the KPIs should be specific enough to provide detailed information about the quantitative objectives you want to achieve. Similarly, they should help you focus on what actually matters so that you can allocate resources correctly and take corrective actions whenever necessary.
  • Similarly, KPIs should be able to help you in tracking performance and decision making process.  Correctly formulated KPIs result in committed and stimulated efforts and sustainable growth. Furthermore, they also result in standardisation of the processes and promotion of transparency. They help organisations benchmark their objectives more effectively by comparing with other organisations and identifying more opportunities. Last but not the least; they also facilitate business leaders to educate stakeholders about the projects.
  • Performance Culture:
    Organisations should also develop a positive performance culture during the formulation, execution and monitoring of KPIs in order to improve their performance. In fact, performance management is like embarking on a journey towards a destination. It will pull things together in an organisation helping all the stakeholders to achieve their respective goals and objectives.
  • Clarify Terminology:
    Some organisations have been using KPIs for long now but they are still unable to define KPI correctly. They lack the clarity not only about KPIs but also about many associated terms. It is imperative for companies to understand the difference between terms like matrices, targets and KPIs etc in order to maximise the advantage of implementing them in their workplace. A simple definition of KPI states it is a “a measurable expression for the achievement of a desired level of results in an area relevant to the evaluated entity’s activity”.
  • Terminology Standards:
    Organisations also need to standardise terminologies associated with KPIs. This is important because non-standardised terms will create confusion among the employees because everyone will tend to derive his own meaning and work accordingly. In this regard, your objectives should start with verbs, KPIs with symbols such as $ and initiatives with nouns and adjectives.
  • Extensive Research:
    Organisations should not blindly follow others companies when it comes to using KPIs. They should do an extensive research to identify examples relevant to their respective niches. They should also try to analyse how much those KPIs helped other organisations to enhance their performance. It is also important to classify them in different groups. For example, you can divide them into industrial KPIs, functional KPIs, management KPIs and so on. The benefit of classifying KPIs is that everybody understands what different KPIs mean and how to use them.
  • Value Flow / Programme Logic Analyses:
    Organisations that are new to KPIs must do this process in order to identify and implement correct KPIs. It is a traditional four step process incorporating inputs, processes, outputs and outcomes. Organisations can create KPIs regarding how many resources to allocate for a certain task (input), the % of time and money required to complete that task (processes), what are the outcomes of the task (output) and what impact it has on a large group of people (outcome).  Following is a diagrammatic explanation of entire process.


  • KPI Documentation Process:
    It is not sufficient to simply establish KPIs and use them but it is also mandatory to document them. It is a fact that organisations who document KPIs perform much better than those who do not. On average, organisations take help of 12 different fields to maintain record of KPIs. Some organisations document them by name, some by definition and some by calculation formula. Yet, there are some who use criteria like data source, purpose, target and standard reporting frequency etc. You can also use any or all of these fields to document KPIs, using separate KPIs forms for each of them.
    KPI documentation process usually includes:
  • Reviewing of internal literature and external sources.
  • Consultation with staff regarding collecting and using data.
  • Presentation to higher authorities for approval.
  • Review and approval by KPI architect.
  • Approval by management team and addition to KPI library.
  • Design Meaningful Reporting Pages:
    Employees dealing with KPIs have to present all the data in an attractive and engaging way as it will create more impact on everyone. Therefore, it is important for them to design meaningful KPI reporting pages that will help them to explain the entire process rather easily. Another advice is to design dedicated pages for each KPI as it will make your task rather simple and straightforward. These pages can contain things like tables, graphs, illustrations and images to make KPIs more interesting and easy to understand for all concerned.
  • Root Cause Analyses:
    Once you have acquired all the data about KPIs and they are producing desired results, you need to do a root cause analyses of how to solve problems identified by KPIs. You should not jump to the conclusion but should do a step by step analysis about what are the symptoms and root causes and how to find the best possible solution. This method helps you to continuously improve and prevent problems over a period of time.
  • Benchmarking:
    Finally, it is necessary for organisations using KPIs to put them in the context of benchmarking. They should use KPIs to measure the quality of their policies, strategies, programs and products etc. The objective of benchmarking KPIs are to determine which areas need to be improved, analyse how other organisations perform brilliantly and further use this data to improve their own performance.

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