In the electricity sector, one of the common performance measures used to track the reliability of the electricity network – the system of cables and transformers and so forth that deliver the power to homes and businesses – is called SAIDI, the System Average Interruption Duration Index.
A typical way to report SAIDI was a graph with a 12-month moving or rolling average.
Moving averages are often used to smooth out the seasonal fluctuations you see in a lot of financial data. When these seasonal fluctuations are smoothed out, you are supposed to be able to see the overall trend in your data.
For the manager who needs to track a lot of performance results, this sounds heaven-sent. And that’s why they are such a popular trend analysis technique.
But popular doesn’t mean appropriate!
For one energy company, their SAIDI KPI showed a lovely, downward trend. It convinced everyone that performance was improving (in response to their great management).
But performance WAS NOT improving. They were misled by their graph of SAIDI. The truth was that performance had not changed at all.
How could this be? How could the graph clearly show a downward trend but performance in fact be no better at all?
The culprit for dysfunctional performance management behaviour is the use of statistical methods WITHOUT appropriate statistical thinking.
A FREE WEBINAR:
Coming up on October 24 I am giving a free webinar on this very topic of the lies your KPIs are telling you.
In this webinar you’ll discover some revelations that can dramatically transform the speed and cost of performance improvement in your company or organisation.
— How you are being MISLED by moving averages, trend lines, month-to-month variances and other popular KPI presentation methods.
— Why you are making performance WORSE (not better) by comparing each KPI value to a target or a benchmark or a standard.
— How you and your colleagues are DELUDING yourselves in believing that your performance improvement projects are anything other than a complete waste of time and money.
— The one simple change to how you report your KPIs that will get the truth out of them, and sky-rocket your performance improvement.
I´m really sorry i couldn´t attend this meeting.
Arturo, this webinar is now available as a video replay, so if you go to http://www.staceybarr.com/webinars/YourKPIsAreTellingYouLies, you can still register to get the replay link.
Not sure how long it will be available for, but at least until November 16.