Key

Performance
Indicators
December 2020

Noha Radwan
ACC Coach & Consultant
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Reading
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Workshop Contents

 Strategic planning and Raising Commitment

 Vision, mission, goals and KPI’s overview, roles, and differentiation

 KPI’s (Characteristics, types, benefits, levels)

 How to define & evaluate KPIs
 Organizational Values

 KPI documentation form design

 Techniques to Choose KPI
 Data gathering and analysis

 Corporate performance management and Balanced score cards

 Performance Management process
Learning objective
 To ensure management team have the skills to quantify impact, and provide
timely direction for employees’ contribution at all levels to achieve alignment
between strategic direction and organizational activities
 How clarity of objectives improves motivation and delivers performance
 How to define & measure an organizational objective
 How to translate and cascade KPI’s at all levels
 Implement Key Performance Indicators Management Framework
 Ensure effective management of the KPI measurement process in all
phases
Agenda

 Strategy and performance management terminology review

 Challenges In Performance measurement
 Key Performance Indicators concept map
 KPI historical overview and current state of practice
 Types of KPIs, measures and metrics
 Efficiency KPIs: when to use and their formula
 KPI documentation form design
 Management theory informing the value added by using KP
Strategic Planning & Raising commitment
Your vision should
VALUES
inspire people to
dream….
Your mission should Values same as
inspire them to Strategy shall
action come from
Top to Bottom
Vision & Mission Statements
 Vision & Mission Statements are the inspiring words chosen by successful leaders to
clearly and concisely convey the direction of the organization.

 By crafting a clear mission & vision statements, you can powerfully communicate
your intentions and motivate your team.
Vision Statement
What is the vision statement?

 Vision Statements also define the organizations purpose, but this time they do so in
terms of the organization's values rather than bottom line measures (values are
guiding beliefs about how things should be done.)

 The vision statement communicates both the purpose and values of the organization
internally & externally.
Vision Statement Creation
Vision Statement Creation
 Project five to ten years into the future
 Imagine a future world in which your business is competing well in or dominating the market
 What does that world look like?
 Can you get there? For example, if you want to double your company’s profit in five years,
 what would that entail?
 Would you be in a different geographic area?
 Would you sell different products or services?
 Would you become a strategic partner with your clients rather than a third-party vendor?
 This “world” is where your vision statement should live.
 Describe what success looks like in your operations
 This doesn’t mean going into detail about how your operations work, but rather what sets them
apart. Be succinct and clear with your definition
 Reference your competitors or create an analogy
 If you’re a smaller organization building into a new niche, consider referencing an organization
that your employees would quickly recognize. This will allow them to create an immediate
picture of your vision.
Vision Statement Tips
Vision Statement examples
Example
 Using the example mission statement developed for Farm Fresh Produce:

 The four most important things she identifies are: freshness, healthiness, tastiness
and "localness" of the produce:

"We help the families of Main Town live happier and healthier lives by pro
viding the freshest, tastiest and most nutritious local produce: From lo
cal farms to your table in under 24 hours."
Activity Time

 Write down your own vision statement

 What have you noticed?

 What was challenging? Why?
Mission Statement
What is the mission statement?
 A Mission Statement defines the organization's purpose and primary objectives
 Its prime function is internal, and its prime audience is the leadership team and stockhold
ers.
Mission Statement Creation
Mission Statement Creation
 Start with a market-defining story;
- You don’t have to write the story—it’s definitely not included in the mission statement but
do think it through:
- Imagine a real person making the actual decision to buy what you sell. Use your
imagination to see why she wants it, how she finds you, and what buying from you does
for her. The more concrete the story, the better. And keep that in mind for the actual
mission statement wording: “The more concrete, the better.”

 Define your purpose

 Be specific

 Inspire & polish

Mission Statement Creation
Mission Statement Examples
Example
 Take the example of a produce store whose winning idea is “Farm Freshn
ess".
The owner identifies two keys measures of her success: freshness and custo
mer satisfaction

 Accordingly, the mission statement of Farm Fresh Produce is:

"To become the number one produce store in Main Street by selling the
highest quality, freshest farm produce, from farm to customer in unde
r 24 hours on 75% of our range and with 98% customer satisfaction."
Tips for Mission Statement

 Don’t begin by trying to write something. Focus first on the mission itself
 Ensure that board members and the chief executive agree on the mission
 Keep The Mission Visible, Robust, Nimble, and Relevant
 Offer opportunities for longer mission interaction
 Consciously use mission as the basis for making tough Decisions
Activity Time

 Write down your own Mission statement

 What have you noticed?

 What was challenging? Why?
Group Discussion

 In one word describe KPIs?

 Why do you think KPIs are important?

 Share some examples for KPIs in real life

Goals
 Organizational goals are strategic objectives that a company's management establishes to
outline expected outcomes and guide employees' efforts.
Importance of Organizational Goals
 Goals help define a company's purpose

 Assist its business growth and achieve its financial objectives.

 Setting specific organizational goals can also help a company measure their organization's progress

 Determine the tasks that must be improved to meet those business goals.

 Goal setting can also help an organization achieve increased efficiency, productivity and profitability.

 Increase Employees Engagement and loyalty

Key Performance Indicator (KPI) Definition

 A Key Performance Indicator is a measurable value that demonstrates how effectively a

company is achieving key business objectives.

 Organizations use KPIs at multiple levels to evaluate their success at reaching targets.

 High-level KPIs may focus on the overall performance of the business, while low-level KPIs
may focus on processes in departments such as sales, marketing, HR, support and others.
Key Performance Indicators

 Performance measure: Refers to an indicator used by management to measure, report

and improve performance. Performance measures can be key result indicators, result
indicators performance indicators, or key performance indicators

 Critical success factors: A list of aspects or issues of organizational performance that

management knows are very important in order to perform well in any sector/ industry
Key Performance Indicators
 Key Performance Indicators are by definition meant to show an organization efficiency

 The key is to set the correct metrics and to have the right solution to show the performance
data effectively.

 KPI is a tool to track or measure actual performance against the strategic goal
Characteristics of KPIs

 Measured frequently (daily or weekly)

 All staff understand the measure and what corrective action is required
 Responsibility can be tied down to the individual or team
 KPIs are current or future oriented measures

EXAMPLE:
- % of employee turn over & % of retention
How Do KPIs Best Serve Organizations

KPIs monitor the implementation and effectiveness of an organization’s

strategies as they determine the gap between the actual and the targeted
performance and determine organization effectiveness and operational
efficiency.
The Benefits Of KPIs to the Company
1. Targets are
easily measured

KPIs are not company goals or targets, yet they are measurements of those targets.
A manager is usually aware of the performance of the team more if KPIs exist in the
company
The Benefits Of KPIs to the Company

2. Important Information is
revealed:

KPIs provide a look on the company’s overall performance which might help in the
long run, in gaining competitive advantage over competitors
The Benefits Of KPIs to the Company
3. Encourage
Accountability:

Without KPIs, a manager is at risk of making inaccurate decisions or assessments

about his or her employees regarding performance.
The Benefits Of KPIs to the Company
3. Encourage
Accountability:

Without KPIs, a manager is at risk of making inaccurate decisions or assessments

about his or her employees regarding performance.
 Activity Time- Break out rooms 10:00

 You and your team will introduce a new project to the company you work in;

 Give a quick overview on the project and its benefits to the Company
 Identify 3-5 KPIs that you plan to use to measure the success of the project
Measurements of Project Performance

 Project impact
 Financial
 On-time
 Resources
 Quality
 Return on investment
 Solve the issue
What Types of KPIs Do You Know?
Key performance indicators

Numbers are only an indicator

Measure Only what really matters..
• KPIs can be specified by answering the question:
“What is really important to different stakeholders?”

• KPIs are either:

√ Quantity
√ Quality
√ Time
√ or Cost oriented
• KPIs shall change when objectives are met or management focus shifts
Key Performance Indicators Types

There are four types of performance measures: KRIs

Peel the skin to
 Key result indicators(KRIs): They tell you how you have find RIs & PIs

done in a critical success factor.

 Result indicators (RIs): They tell you what you have
done RIS&PIS
Peel the core to
 Performance indicators (PIs): They tell you what to do. find KPIs

 Key performance indicators (KPIs): They tell you what to

do to increase performance dramatically. A
KPIs
Key result indicators (KRIs)
 They are the result of many actions: they give a clear picture of whether you are
headed in the right direction.
 They do not tell you what to do to improve those results
 They cover a longer period than KPIs. They are reviewed monthly or quarterly cycles
 KRIs are included in a governance report at the organizational level
(a dashboard format),consisting of up to 10 KRIs for the board of directors and 20
measures(a mix of KPIs ,RIs ,PIs) for management.
 KRIs include:
 Customer satisfaction
 Net profit before tax (PBT)
 Market share
 Employee satisfaction
 Return of employed capital
Performance and result indicators
(PIS & RIS)
 The 80+- performance measures that lie between the KRIs and KPIs are the
performance and result indicators(PIs & RIs)
 They are important but not key to the business
 PIs are nonfinancial and complement KPIs
 They help teams align themselves with the organization’s strategy
 They are cascaded from the organization level to the team level they lie beneath the
KRIs
 PIs include:
 Percentage increase in sales with top 10% of customers
 Number of employee’s suggestions implemented in last 30 days
 Customer complaints from key customers
 Sales calls organized for the next week, two weeks
 Late deliveries to key customers
Performance and Result Indicators
 The result indicators (RIs) summarize activity, and all financial performance measures
(daily or weekly sales analysis is a very useful summary, but it is the result of the effort
of many teams

 Result indicators (RIs) includes:

 Net profit or key product lines
 Sales made yesterday
 Customer complaints from key customers
 Hospital bed utilization in week
Key Performance Indicators (KPIs)
Definition: KPIs represent a set of measures focusing on the most critical aspects of
organizational performance for the current and future success of the organization

 Seven characteristics of KPIs:

 They are non-financial measures(not expressed in $,pounds, euros, etc)
 Are measured frequently(24/7, daily, weekly)
 Are acted upon by the CEO and senior management team( CEO can call relevant staff to enquire what is
going on)
 Clearly indicate what action is required by staff (staff can understand the measures and know what to fix)
 Are measures that tie responsibility down to a team (the team leader can take the necessary action based on
the call of the CEO)
 Have a significant impact (affect one or more of the critical success factors)
 They encourage appropriate action(have been tested to ensure they have a positive impact on performance)
What are the three levels of KPIs

Overall Business KPIs:

Increase customer loyalty

Departmental/ Team KPIs:

Decrease customer
complaints

Individual KPIs: Phone

answering percentage
Examples of Marketing KPIs

Consumer Delivery of
Brand Awareness %
Awareness Materials

Number of
Effective Reach client visits Staying in Budget

Return on marketing
Website Hits Brand Strength
investment (ROMI)
Examples of Customer Service KPIs

Number of Percentage of calls Total calling

complaints transferred time/day/week

Costs of operating Answering Cost per minute

call center percentage of handle time
Examples of HR KPIs

%of HR budget spent

Average training days/ Talents/customers
on
costs per employee retention percentage
training

% of employees Employee benefit

Average time/cost to
receiving regular Costs as a percent
recruit
performance reviews of labor costs
Examples of Operations KPIs

% Operational
% Average Production
# Processing Errors Equipment
Yield
Effectiveness

% Works Orders
% Production
Delivered within Value of back orders
variances
Standard Lead Time

% Projects completed # of customer

% Labor Utilization
by Deadline complaints
How to Define KPIs
Executives or managers first look at the strategy carefully then take the following steps

Define the results intended or needed

Understand alternative measures

Select the right measurements for each objective

Define multiple indicators as needed

How to Define KPIs
 What is your desired outcome?
 Why does this outcome matter?
 How are you going to measure progress?
 How can you influence the outcome?
 Who is responsible for the business outcome?
 How will you know you’ve achieved your outcome?
 How often will you review progress towards the outcome?
How to Define KPIs
 Strategic goal: It's always best to clearly specify to which strategic objective the KPI relates
to that everyone looking at the KPI immediately appreciates its relevance.

Example: Grow customer satisfaction.

 Audience and access: Here you define the primary audience for this KPI - basically, who is
this data for and who will have access to it.

Example: The Board of Directors and Marketing Team.

 Key Performance Question (KPQ) : Your KPI template should state the Key Performance
Questions (KPQ) that the indicator is helping you to answer. This helps to provide context ar
ound why this KPI is being introduced and on which specific issue

Example: To what extent are our existing customers satisfied with our service?
How to Define KPIs
 How will and won't this indicator be used: Specify how the KPI will be used so that everyone is
clear about how you plan to use the information. Also define how the KPI will not be used.

Example: The indicator will be used to assess and report on our customer success
internally. It will not be used to assess performance of individuals or to determine bonus p
ayments.

 Indicator name: Every KPI needs a name so that you can discuss it collectively. Choose a name that c
learly explains what the indicator is about.
Example: Net Promoter Score (NPS).

 Data collection method : Your KPI template should identify and describe the data collection metho
d you are going to use for each KPI. Data collection methods can include surveys,
questionnaires, interviews, sensor data collection, focus groups, automated machine data
collection as well as collection of archival data.
Example: The data will be collected using a mail-based survey.
How to Define KPIs
 Assessment/formula/scale criteria: Describe how performance levels will be determined.
This can be qualitative, or it can be numerical or using a scale

Example: Using a 0-10 scale (Not at all likely to extremely likely) participants will answer:
How likely are you to recommend us to a friend?
NPS = percentage of Promoters (score 9-10) - 5 of Detractors (score 0-6).

 Targets and performance thresholds: Define a target or benchmark for each indicator.
Here you can also outline the performance thresholds, that is, when performance levels are
judged to be good or bad.
Example: NPS of 55% by the end of 2020.

 Source of data: Your KPI template should specify where the data is coming from so that people usin
g the KPI can be assured of its reliability and validity.

Example: Survey of existing customers.

How to Define KPIs
 Data collection frequency: State how often the data for the KPI will be collected and
coordinate the collection dates accordingly. This could be hourly, daily, monthly, quarterly or
annual collection.
Example: Monthly data collection from a sample of 10% of our customer database.
 Data reporting frequency: Specify when and how often the data for the KPI will be
reported. It makes sense to coordinate the data collection and reporting frequency to ensure
the data you are reporting is as current and up-to-date as possible.
Example: Monthly reporting.

 Data entry (responsible person): Your KPI template should also specify the individual or
job title of the person responsible for the data collection and data updates.
Example: Ian Miller, Marketing Assistant.

 Expiry/revision date: The key performance indicator template should always include an
expiry date or revision date.
Example: In 12months’ time.
How to Define KPIs
 How much will it cost: Measurement and data collection can be expensive. It's important
to estimate the costs for collecting and monitoring an indicator and evaluate whether the costs are justifie
d.
Example: Costs are significant but cheaper than a traditional customer satisfaction survey
How to Define KPIs
As an example,
Your objective is to increase sales revenue this year. You’re going to call this your Sales
Growth KPI. Here’s how you might define the KPI:

 To increase sales revenue by 20% this year

 Achieving this target will allow the business to become profitable
 Progress will be measured as an increase in revenue measured in dollars spent
 By hiring additional sales staff, by promoting existing customers to buy more product
 The Chief Sales Officer is responsible for this metric
 Revenue will have increased by 20% this year
 Will be reviewed on a monthly basis
Leading Vs. Lagging KPIs

Describes predictive actions that can change Describes effects that have already occurred and
future performance and help achieve success. cannot be changed.
For example, employee satisfaction indicates For example, turnover rate indicates the success or
lack of success in employee engagement.
future retention rates and associated costs of

hiring.
Activity Time

 Think of one Goal/or Task you have this year;

 Now assign 3 KPIs to it.

 What was challenging? Why?
Techniques to Choose KPI

 KPI expo
 KPI wall clustering
 KPI selection criteria
Techniques to Choose KPI
 The KPI Expo: consists in presenting a list of KPIs during the KPI selection workshop to offer participant
s an idea of how KPIs look like and to start the process with the end in mind. This is not a list that has to
be refined to finalize the selection.

 KPI wall clustering is an exercise used to group KPIs based on objectives or relevant activities. It is imp
ortant to ensure interactivity between workshop participants during the exercise.

 KPI selection criteria refers to defining clear specifications that will help to filter all the KPI examples
KPIs should be:

o Relevant
o Clearly defined
o Balanced
Key Performance Indicators

Examples of future measures:

 To be an innovative organization, we need to measure the number of initiatives that will happen in
the next week, fortnight, and month
 To increase sales, we need to know the number of sales meetings that have been scheduled with
our key customers, in the next week, fortnight and month)
 To maintain a close relationship with our key customers, list should be prepared with the next agreed
social interaction(to attend a sports event, a meal, the opera, etc....)
 To maintain the profile of our CEO we need to monitor the public relation events that have been
organized for the CEO to attend in the next 1-3,4-6,7-9 months.
 To maintain staff recognition, the CEO needs to monitor the formal recognitions planned for next
week/next fortnight by the CEO& senior management team
How To Evaluate Good KPIs
 They have to reflect strategic value drivers
 They are defined by executives
 They are communicated and cascaded to the whole organization
 They are based on corporate standards
 They are based on valid data
 They are understandable
 They are relevant
 They lead to positive actions and performance
Activity Time- Break out rooms 10:00
 In your group evaluate the following KPIs:

 Gross Revenue.
 Total Visits ……………. not based on valid data
 Employee Turnover Rate (ETR)
 Employee Satisfaction
 Internal Promotions Vs. External Hires ……………. not relevant
 Cash Flow From Financing Activities
 Day Sales Outstanding (DSO)
 Good place to work for ……………. not defined,
 Business is doing well ……………. not defined,
 Number of Fatality/injuries in a Year
Organizational Values
 Values are the principles that guide an organization’s internal conduct as well as its
relationship with its customers, partners, and shareholders.

 Values define what the organization stands up for, highlighting an expected and ultimate
set of behaviours and skills.
Balanced
Scorecards
Creating Strategy
map to drive
corporate
performance
 Corporate
Performance
Management
Performance Management framework
Performance Management Components
Performance Management cycle
Managing performance with balanced scorecards
Balanced Scorecards
Balanced Scorecards
Perspectives in Balanced Scorecard
Balanced Scorecards
Strategy and Balanced Scorecard
Strategy Map Framework
Strategy Map Framework
Financial Perspective
Strategic Objectives in Financial
Customer Perspective
Strategic Objectives in Customer
Internal Process Perspective
Strategic Objectives in Internal Process
Learning and Growth Perspective
Learning and Growth Perspective
Strategy Map Template
Strategy Map Template
Identifying
KPIs
Key performance indicators
KPIs Guidelines
KPIs Guidelines
KPIs Family Dimensions
KPIs Family Dimensions
KPIs Family Dimensions
KPIs Family Dimensions
KPIs Category Dimensions
KPIs Category Dimensions
KPIs Category Dimensions
 Strategy Map for
corporate functions
(HR, IT, Marketing
and Finance
Integration between Corporate and Division/
Department
Corporate and Division Scorecard
Corporate and Division Scorecard
Corporate and Division Scorecard
Division Strategy Map Template
HR Strategy Map
IT Strategy Map
Marketing Strategy Map
Marketing Strategy Map
Performance Management
What Is Performance Management?
 The continues process employers use to make sure employees are working toward
organizational goals in an effective and efficient manner.

 It maintains and/or improves employee job performance through:

 The use of performance assessment tools
 Coaching
 Counseling
 Providing continuous feedback.
Performance Management
Performance Standards
Management expectations shall be translated to:

Behaviors Results

What the organization What the employee must

wants the employee to do produce or deliver

Standards should be well communicated and understood throughout the

organization.
Performance Management Process

Action Plan
Performance
Appraisal

Performance
Standard

Organizational & Departmental:

Mission, Vision & Values
Why Evaluate Employee’s Performance

1 Appraisals play an integral role in the organization’s performance management & talent
management processes

2 The appraisal lets the manager and the employee establish a plan for correcting any
deficiencies and to reinforce the things the employee performs correctly

Appraisals should serve as a useful career planning purpose. They provide an opportunity
3 to review the employee’s career plans in light of his or her exhibited strengths and
weaknesses

4 Salary Increases and promotional decisions should be based on the employee’s appraisal
outcome
Evaluating the Performance Management
System
Approaches to measuring effectiveness of performance
management system

 Ensure managers well understand the process

 Track completion of activities.
 Review Performance standards across the organization
 Review alignment with organization’s strategic goals.
 Confirm positive relationship of appraisal results with prom
otions and pay increases.
 Gather feedback from users.
Management By Objectives (MBO)
A management model that aims to improve performance of an organization by clearly
defining objectives that are agreed to by both management and employees. ...
Aligning Employee’s Objectives

 Employees Objectives have to aligned with the Department’s Objectives which is already
aligned with the company’s strategy.
 Employees Objectives need to be tied to KPIs and definitely need to be
How Many Objectives Per Employee

2-4
4-8 People Objectives
Business Objectives “Leaders”

1
Personal Development
Objective
Weighing Objectives %

 Each Objective Shall have a weight (%)

 The weight of each objective determines the relative importance, time spent, and
difficulty
 All weights shall be added up to a total of
Measure Vs. Metrics Vs. Analysis
KPI Table for HR Manager
KPI Table for HR Manager

Key result areas are the

main goals that HR mana
ger needs to accomplish.
In this sample, we have
four key result areas.
KPI Table for HR Manager

• Key performance indicat

ors are measurable
indicators used to
evaluate
your performance level
• Every Key Result Areas
must have at least one
KPI.
• Average number of KPIs
shoud be 8 – 10 items.
KPI Table for HR Manager

Weight of each KPI s

hould be defined.
Weight of KPI is deter
mined based on the s
cale of priority. Total
weight should be 100.
KPI Table for HR Manager
Targets are defined bas
ed on historical data
and future expectations.

Targets can be percent

age, number, or score
– depending on the typ
e of KPIs.
KPI Table for HR Manager

Actual is the actual result

s. Or
target achievements.

We should develop report

ing system to capture the
se results.
KPI Table for HR Manager
KPI Table for HR Manager

Formula to calculate score :

Actual / Target x 100 (for KPI
Maximize, the higher
the better)
or
Target / Actual x 100 (KPI Mi
nimize; the lower the better).
KPI Table for HR Manager
KPI Table for HR Manager

Formula to obtain Fi
nal Score = Score x
Weight /100
KPI Table for HR Manager

Final Score is used to determine

bonus allocation, salary increase,
and promotion.
Activity: Case Study

 In your Group, read the royal air force case study and answer the questions
 What was the most challenging thing in your assignment
 How comfortable are you in applying the same techniques in your current job
Remember the following areas

1. What Are The 4 Perspectives The Balance Scorecards Look At?

2. What are the Steps to Develop KPIs?

3. How Do KPIs Best Serve Organizations?

4. What Is The Difference Between KRAs And KPIs?

5. What Are The Three Levels Of Cascading KPIs?

6. What Types of KPIs Do You Know?

Action Plan

 Write down your action plan after the course

 How could you make it happen
 Any
Questions
 Thank you
Insert the title of your subtitle Here