Do you know how to create key performance indicators?

As any reader of my blog knows, I believe in a system. But a system does not work unless you have performance indicators along the way. And the real secret is that your system only works as well as your Key Performance Indicators (KPI) are constructed. The time spent in making good KPI’s are well worth it but the task is seldom done . They are truly the backbone of any system and will allow you to do exactly what a system was developed to do….ALLOW FOR CONTINUOUS IMPROVEMENT.

Several myths need to be displayed about KPI’s and the easiest thing to do is to list what they are not:
1. A tool to assign blame
2. Wall paper
3. A work measurement
4. Simply something that we able to measure
5. A Statistic
What they are:?
1. KPI´s are related to results
2. KPI´s shows something measurable, (From what to what)
3. Represents both management and workforce
4. Can be calculated to meet the budget or a specific level of improvement
5. Communicate status
6. Used to connect the customer to the process
7. Essential, Useful, Immediate

But the real question is how do you create them. The most simple way to do them is utilizing the planning guide of PDCA that I have described numerous times as part of my planning cycle. It may seem rather elaborate but using a quick hub and spoke wheel, it really is quite simple. And you must remember this is the key to your system.


Several other critical factors in making the KPI’s effective:

  1.   Make measures visible
  2.   Easy to understand, use, collect and acted upon
  3.   Act quickly to manage variances
  4.   Communicate barriers to implementation

I typical tell people is that it will take time to develop good KPI’s and your continuous improvement structure is a direct result of fine tuning KPI’s over and over again.

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