Key Performance Indicators - Parmenter David

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purpose of performance measures is to ensure that staff members spend their working hours focused primarily on the organization's CSFs. Not knowing your organization's CSFs is like going to soccer's World Cup without a goalkeeper, or at best, an incompetent one. You can do it but you will not succeed.

      In Chapter 11 I discuss the revised process to ascertain an enterprises' CSFs.

      More Examples to Aid with Finding Your Critical Success Factors

      Through working on in-house workshops with clients I have been able to observe the issues in the KPI methodology that may have initially been confusing. In client workshops, I have been able to observe where clients have modified the methodology to make it work in-house. I am grateful for this opportunity to learn and share their wisdom, in this new edition.

      Critical Success Factors Are Operationally Focused

      Recently I have realized the importance of emphasizing that critical success factors are operationally focused. A board of a charity rightly pointed out that the CSFs tabled to them were too internally focused. They wanted to see, understandably the external picture, the external CSFs. The board was naturally looking from outside-in. The board needed the external CSFs expressed as outcomes and impacts they want to see. “We want the organization to deliver ____________, deliver _________. We will then know that the organization's strategy has been implemented successfully.” These statements, while commendable, must be separated from the CSFs. Their success will be a direct result of staff delivering day-in day-out on the operational critical success factors.

      This recent clarification has fixed an issue I have noted in a number of in-house workshops I have run where there was a mix of operational CSFs and outcomes/impacts. This distinction is important, and while at first, an added complication, it is worth the effort to understand and execute. See Chapter 11 for more detail.

      A Simplified Six-Stage Stage Methodology which Incorporates the Original Twelve Steps

In the first two editions of my KPI book I talked about a 12-step process that should be put into an organization with over 500 full-time employees within a 16 week time frame (see Exhibit P.5). I also gave a shorter version with a six-week timeframe for organizations with less than 200 FTEs where there is a motivated CEO and senior management team.

Exhibit P.5 Twelve-Step Implementation 16 Week Timeline

I was asked by clients to further simplify the process and I used the pretext of the third edition to rethink the approach to make it more user-friendly. The new model incorporates the twelve-steps in a six-stage process (see Exhibit P.6).

Exhibit P.6 The 12 Steps Merged into a Six-Stage Process

      Substantial Change to the Foundation Stones of a KPI Project

There are a number of foundation stones that need to be laid before we can commence a KPI project and give it a chance of success. Success is determined by the presence and state of these seven foundation stones underpinning the KPI stages (see Exhibit P.7).

Exhibit P.7 The Seven Foundation Stones Underpinning the Six-Stage Process

      “Abandon Processes That Do Not Deliver.”

      The need for this foundation stone came about as a result of fervently reading Peter Drucker's work. I knew if I really understood his work I would be able to improve my understanding of performance management.

      Of all his legendary insights, “abandonment” stands head and shoulders above them all. Drucker saw abandonment as the vital source, the fountain of innovation. Abandonment is a sign that management is recognizing that some initiatives will never work as intended and it is better to face this reality sooner than later. It is essential that the organization has freed up enough time to give the KPI project team and the attendant balance scorecard the time and commitment they deserve.

      Appoint an In-house Chief Measurement Officer

      There needs to be a new approach to measurement – one that is done by staff who have been suitably trained, an approach that is consultative, promotes partnership between staff and management, and finally achieves behavioral alignment to the organization's critical success factors and strategic direction.

      I have been working with performance measures for many years and have spent untold hours endeavoring to unlock their secrets. Over the years one thing has become abundantly clear that you need a measurement expert in-house. Dean Spitzer6 called this the chief measurement officer.

      I have now emphasized the significance of this position by making it a non-negotiable foundation stone and I have explained why this person needs to be an in-house appointee (see Chapters 7 and 9).

      “Organization-wide understanding of winning KPIs definition.”

      After working over 20 years on what makes KPIs work, I have realized that unless the organization embraces the new definition of what a KPI is and what it is not, the progress will be limited very quickly.

      I have found repeatedly that, once an organization has held the two-day critical success-factor workshop, staff who have gone back to their offices soon start to call all measures KPIs again.

      It is vital that the senior management team, led by the CEO, communicate the new meaning of a KPI and that all breaches of the term KPI are quickly picked up and staff and managers corrected.

      Chief Measurement Officer's Toolkit

      With all my books there is a heavy focus on implementation. My role, as I see it, is to prepare the route forward. To second guess the barriers the KPI team will need to cross and set out the major tasks they will need to undertake.

      Naturally each implementation will reflect the organization's culture, future ready status, the level of commitment from the CEO and the senior management team, and the expertise of the in-house staff selected to run this project.

      I have provided a PDF of templates to be read and used in conjunction with Key Performance Indicators, Developing, Implementing, and Using Winning KPIs, Third Edition. The location of the templates is indicated in the relevant chapter with this icon

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      Case Studies

      To assist implementation I have further developed the lessons from KPI implementations I have been privileged to witness as an observer.

      Common CSFs and their Relevant Measures

      Although organizations need to go through the processes suggested in this book, I am always asked to give examples of common CSFs and their related performance measures.

      In Chapter 17 I set out a table of common CSFs and the key result indicators (KRIs), result indicators (RIs), performance indicators (PIs), and some key performance indicators (KPIs) that would work.

      Comparison to Other Methodologies

      I have compared, in Chapter 18, the winning KPIs methodology to Kaplan and Norton's balanced scorecard, Stacey Barr's PuMP, and Paul Niven's balanced scorecard. I have also highlighted important sections of their work that the reader is advised to access.

      Chief Measurement Officer Job Description

      To

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