Librarian thoughts
How does one come to a set of KPIs?
How does one come to a set of KPIs for their own specific company?
Setting KPIs is not easy and it is not always wise to simply copy what others have done and rely on best-practices.
In general, KPIs are related to the corporate strategy of a company. What is the goal of the company for this year? Is it to break-even, to grow marketshare?, to deliver new products to the market, to be the most customer friendly company in the market?
A company can be broken down in core processes and supporting processes. The core processes make the difference with the competition, it is what makes your company unique. The supporting processes are often not unique. This differs per industry. In the finance and telco industry, the IT processes are core processes and allow them to compete, think about better financial analysis applications or faster networks, however in most industries IT is not a core process and simply supporting.
For your supporting processes (HR, Finance, IT) it is often ok to standardize on best-practices. However for your core processes you should perhaps start with best-practices but think about your KPIs as an extension of your corporate strategy. What are your goals? How are you going to measure and quantify those goals. And if your goal is to make a big profit, then do not make the mistake to call profit an indicator. financial outcomes are not often indicators, but results. The indicators are “more sales meetings, bigger quotations, more leads, more partnerships, more projects. These indicators lead eventually to more profit. A KPI is a Key Performance Indicators, not a Key Performance Outcome.
You can use KPI Library to find best practices for your processes and perhaps your industry. Use this as a starting point, a source of inspiration to start your internal discussion with some examples. Dont expect the KPI Library to be your destination, but the start of your journey.
Principal IT Service Management Consultant at Ashrei GmbH
Executive facilitator at Group Dynamics Facilitators
Dear Keith, I am not the librarian but maybe I can assist.But first I must compliment the librarian. Having facilitated more than 4000 strategic plans containing KPI’s the one thing that I have learned is to differentiate between performance indicators and result indicators. Performance indicators deals with the means and result indicators deals with ends.Indicators measuring The Ends,or result indicators should be measured to obtain management info ie. trends,statistics.Indicators measuring the means, should be measured to gauge performance.
Now lets talk about CSF’s without getting too academic. If I run a restaurant for example, CSF’s would be something like Ambience,Stock Control, Product consistency and Service excellence. The KPI’s could be complaints received vs adressed(%), Compliments received(number),Out of stock situations(number),Stock loss(Currency value)etc. It might happen that the CSF and the Process/objective are the same sometimes. The best basis for KPI’s, in my opinion, is a framework of strategic goals and objectives that are designed for stability in the planning system rather than on prioties. The key here really is,is it important to measure to gauge performance.If you want to call a key process or an objective a CSF so be it. If your CSF’s are not key processes or objectives but something else then ask “is this Means” If so set an indicator for the means and get going.Hope it helps.
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Dear Librarian
I read your post with interest howver I think that there are some key points missing. You are correct that KPIs are related to strategy and goals but once I have defined these I would normally identify Critical Success Factors and relate my KPIs to these.
Given the indicators you listed I suppose my question is when is a KPI a CSF?