Title: Developing Meaningful KPIs by Clive Keyte

Q: KPI
A: A KPI is something that can be counted and compared. It provides
evidence of the success, or failure, of a strategic objective over a
specified time.

Q: Steps to Develop KPIs
A: 1. Create Objective
2. Describe Results
3. Identify KPIs
4. Define Thresholds
5. Measure
6. Interpret Results
7. Take Action

Q: Things to Consider when Writing Objectives
A: 1. Will they contribute to the company/organisation strategy?
2. Are they important and will they make a difference?
3. Are they single objectives?
4. Do you have some level of control to influence the result?
5. Can they be measured?

Q: Why Describing Results
A: To:
1. Check that the objective is an objective (not an activity, plan or project).
2. Frame the objective using result-oriented language.
3. Remove vague words and include things that can be physically perceived.

Q: Key Activities during Identifying KPIs
A: 1. The KPI needs to be clearly described (and based on an objective).
2. The KPI needs to be rated in terms of importance.
3. The KPI needs to be calculated and ownership assigned.

Q: Things to take into consideration for each KPI
A: • Description: A sentence to describe as accurately as possible what the KPI is for.
• Label: The short description, used for presentational purposes, generally 1-5 words.
• Owner: The individual who owns and will drive the KPI.
• Updater: The individual who is responsible for updating the KPI at the pre-defined times.
• Calculation: A mathematical formula that describes how the data elements are combined to provide a number, percentage or currency.
• Frequency: How often the KPI is counted and recorded.
• Scope: What should be included or discounted, often a cap or data range.
• Metrics: The data and the sources of data used in the calculation, it is important to provide a description of the metric items individually to avoid ambiguity.

Q: Thresholds
A: A KPI without a comparator can be used to help stabilise performance. For example, with a new process it is often the case actual values will vary wildly month on month until a process is bedded in. We may not know what a valid variance should be but recording the values will eventually provide enough data to generate an upper limit and a lower limit. So eventually, even a KPI without a comparator will create values to be compared to!
These limits will become the Thresholds.

Q: Targets vs. Thresholds
A: Thresholds are frequently based on targets. This can be an area of contention. Targets are often set using arbitrary methods or justified using unhelpful interpretations of data. However, targets can be helpful when starting the process of defining thresholds. The key point about any target is that it needs to be reasonable and achievable.
For a KPI to be useful we need to clearly state both the acceptable and unacceptable results, the thresholds.

Q: The Purpose of Reporting Results
A: The purpose of reporting is to provide enough detail to enable an organisation to be managed effectively and make decisions. The advantage of using an automated system is the reports are updated when any KPI value is changed. Care needs to be taken when designing a dashboard or report, the key question to be asked is:
• Who is the audience for the dashboard or report?

Q: Questions to Consider when Creating a Dashboard
A: • Is the dashboard suited to the audience it is being built for?
• Does the dashboard have an intuitive user interface and navigation?
• When providing drill-down, does it provide enough additional information?
• Have the right access permissions been set up?
• Is the balance between current and historical data correct?
• Visually, do the important items stand out?

Q: Guidance to Interpreting the Results Provided by KPIs:
A: • Do not rely on point analysis, business is too complex for that.
• Check that the KPI is stable and predictable.
• Always look at related KPIs.
• Train yourself to look at patterns within KPIs and across multiple KPIs.
• Be prepared for more questions rather than answers.
• Drill down into source data for more information.
• Look at long-term and short-term trends (short = 6 months, not less).
• Talk to the owner of the KPI (using data, not emotion).
• The key is to see the difference between normal variation and abnormal.
• Look for ways to change and not control outcomes.

Q: Strategic Initiaves Steps
A: 1. Generating a list of candidate initiatives.
2. Developing the selection criteria.
3. Selecting and prioritising the initiatives.
4. Describing the prioritised initiatives.
5. Funding, implementing and management of the initiatives.