How to begin the process of creating and using KPIs and the business communications process
This is one approach that works. There are others. Feel free to use this if it works for you:
Background
Since a key performance indicator is used to measure your performance relative to a key performance area, you first must decide what are the areas of your business that are critical to your success.
I use process flow mapping to visualize every step(function) that must occur in the flow of your business from sales and marketing, through operations and into finance and administration.
Once this process flow map has been worked through with your key team members, group together functions that impact your customers satisfaction and be sure that each function has an owner. Once all critical functions have owners, this becomes their functional position description. These are the team members that will be accountable for the performance in each area. Visualize what things would be like if you had a team that exceeded all their customer’s needs and wants. You can ask about the quality, quantity, cost and timeliness involved with exceeding those expectations and you begin to form the key performance areas (KPA)and what the measurements for those performances would look like. These, stated in terms that are measurable, objective and contribute to the optimization of the overall process form the basis for the key performance indicators (KPI). During this process of developing KPIs for each team member’s function and the team overall, be sure to guard against local optimization at the cost of system optimization.
The most vital part of an effective use of KPIs is the communication and feedback component. The feedback should be specific and timely enough that mid course corrections can occur in the KPIs if they don’t seem to be measuring the performance that is indeed crucial to overall team success. When setting performance goals based on the KPIs, be sure to make them a stretch to meet. This will provide for an environment where each team member is running at full steam to meet and exceed expectations.
Going back to the work of Aubrey Daniels and others, be sure to provide the proper consequences to help shape behavior. Celebrate success and coach as needed.
