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Blog 8: Five tips for the right KPIs
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Blog 8: Five tips for the right KPIs

Many managers dream of it. Buttons they can turn that tell them what’s going to happen in advance. Information so they can intervene proactively and stay “in control”. The good news is: those buttons exist. The bad news is: organizations don’t use them.

Why organizations are looking backwards

In practice, we see that many organizations lack a proper KPI structure. In fact, they often do not even know what a proper KPI structure looks like, let alone how to set it up. Frequently, in such organizations, KPIs exist as loose stand-alone units of measurement and reporting. Due to the lack of structure, there are often too many and there is no overview. Also, the KPIs that are used are too one-sided, namely of the result-KPI type. Organizations thus steer too much in the rear-view mirror, do not see the relationships sufficiently and lack pro-activity due to missing open position-KPIs. By being linked to the organizational chart, KPIs have become reporting monsters and accountability prevails. This often leads to much frustration among employees and managers. A missed opportunity, because proper design of KPIs will dramatically accelerate collaboration and the learning cycle in an organization.

The proper setup of the KPI structure is crucial for stimulating an effective collaboration within an organization

Peter Geelen – IPM Partners

Better collaboration with the right KPI structure

Organisations are used to working with KPIs. Previous blogs have shown that a proper set-up of the KPI structure determines how well cooperation within an organisation (and sometimes even between organisations) runs. To this end, the KPI structure is linked to customer chains rather than departments (as most organizations do). In this way, all links in the chain are connected and a common interest is created. The drive arises to work together and not just go for the departmental interest. After all, winning the game 2 – 1 is more important than keeping the 0, even for the defense.

5 tips for choosing the right KPIs

Naming KPIs is not that difficult. You soon have too many. However, building a good KPI structure for your organization requires attention. Because with the presence of a good structure, you are able to select the right KPIs. To do that, here are 5 important tips:

  1. Distinguish between result-KPIs and process-KPIs. Result-KPIs are linked to organizational goals. In Blog 3 The 4 Steps to Setting Your Organization’s Right Goals you can read how to set these goals limiting the number to no more than four. These four goals provides focus for the entire organization. Result-KPIs such as customer satisfaction, loyalty, financial KPIs and KPIs for social contributions measure whether you actually achieved these goals. Process-KPIs are linked to customer chains.
  2. Translate result-KPIs through customer chains to departments and employees. This will encourage cooperation rather than compartmentalization.
  3. Create a KPI tree per customer chain. A KPI tree is a cause-and-effect diagram in which KPIs are related to each other. There are some 7 iPM rules for this. One of these rules is that you take customer values and internal values for the most important stakeholder of a chain as a starting point. By having insight into these customer values and internal values, you separate the wheat from the chaff and it becomes clear what needs to be steered.
  4. Steer on open position-KPIs. At the bottom of the KPI tree, place KPIs that say something about the future and thus have predictive value. For example, you can look at technician utilization (%time spent on value-added tasks such as installations or service requests) over the past week. An excellent KPI you might think, but what if you had a KPI that measured future demand against available capacity. Exactly, then you could see now at what future time there will be over- or underutilization and you could act proactively accordingly. By resolving underutilization, installations are completed on time, the customer is satisfied, the customer remains loyal, and sales and thus profits are increased. In a good KPI tree, the relationships are clear and the knobs you can really turn become visible. Therefore, in a good KPI tree, more of these types of open-ended KPIs and relationships will be found. You will be in control.
  5. Automate your KPI reports. By automating, KPI reports are easily and quickly available. It is important that the KPIs are visualized correctly. A KPI score often gives a limited picture. Therefore, determine in advance which business-relevant question should be answered with the respective KPI. By asking this question, the visualization will provide insight into the trend. In case of a positive trend, what caused it, and in case of a negative trend, where does the shoe pinch. So it is not about that one number, but about the complete insight. Insights that you can get by visualizing the KPI with the right dimensions. Visualization guidelines help to achieve the right insights.

APPeL as support for the right KPI structure

From our iPM KPI rules and with the support of our APPeL KPI database, we are able to set up the right KPI structure for organizations based on the iPM rules quickly. This is not only about the right KPIs and KPI structure, but also how to apply them in your daily management. More about this in our next blogs.

The iPM implementation approach

We would like to take you along in the coming weeks with the questions and changes we encounter in practice during the implementation of iPM with our clients. Questions about the setup and organization of iPM, as well as the best implementation approach, will be addressed. The following topics will be covered:

Introduction of iPM

  1. From planning & control to iPM
  2. Ready for take-off
  3. Setting the right targets
  4. Which customer chains does my organisation have
  5. Division of roles: hierarchy versus chain
  6. Tactics of the chain in focus
  7. Customer journey versus customer
  8. How to determine the right KPIs
  9. Getting your KPIs right in 10 days
  10. Consultation structure in iPM organization
  11. Effective performance dialogue and the usefulness of BRV
  12. Leader and team development
  13. Encouragement as a style to get more out of teams
  14. iPM in complex organizations
  15. Tips for implementation

Curious? Get in touch with us!

We outline what we often see in the traditionally driven organization and outline what that looks like when you apply iPM. Want to know more about healthy performance management? We lard that with situations and examples we find in practice. Contact us and we will help your organization move forward!

Back to the overview

Winning with the right KPIs

From strategy to execution: how key performance indicators can help your business.

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Blog 3: The 4 steps to setting the right goals for your organization
5 pitfalls with KPIs for your organization
Prevent silo thinking with the right KPIs