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The New Thinking on KPIs, part 2 of 4

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The characteristics of KPIs

KPIs represent a set of measures focusing on those aspects of organizational performance that are the most critical for the current and future success of an organization. There are only a few KPIs in an organization (no more than 10) and they have certain characteristics.

KPI characteristics include:

  • Non financial measures (not expressed in $s, Pds etc)
  • Measured frequently e.g. daily or 24/7 (KPIs are not measured monthly)
  • Acted upon by the CEO and the senior management team on a daily or 24/7 basis
  • All staff understand the measure and what corrective action is required
  • Responsibility can be tied down to a team
  • The KPI has a significant impact on the organization e.g. it impacts on most of the critical success factors and balanced scorecard perspectives
  • Positive movement affects all other performance measures in a positive way

When you put a Pound or Dollar sign to a measure you have not dug deep enough. Sales made yesterday will be a result of sales calls made previously to existing and prospective customers, advertising, amount of contact with the key customers, product reliability etc. I label any indicator expressed in monetary terms as result indicator, see below for more explanation.

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About the Author

David Parmenter, author of Key Performance Indicators: Developing, Implementing, and Using Winning KPIs and Pareto’s 80/20 Rule for Corporate Accountants, is an international presenter who is known for his thought provoking and lively sessions, which have led to substantial change in many organizations. He is a leading expert in developing winning KPIs, replacing the annual planning process with quarterly rolling planning, accelerating month-end processes, and converting reporting to a decision based tool.

David’s work on KPIs has received international recognition with clients in Auckland, Wellington, Sydney, Melbourne, Brisbane, Adelaide, Canberra, Perth, Kuala Lumpur, Singapore, Tehran, Prague, Dublin, London, Birmingham, Manchester and Edinburgh. David is a fellow of the Institute of Chartered Accountants in England & Wales and has worked for Ernst & Young, BP Oil Ltd, Arthur Andersen, and Price Waterhouse Coopers.

David’s recent thinking is accessible from www.davidparmenter.com. He can be contacted at [email protected] or telephone +64 4 499 0007.

This articles is an extract from his “Implementing winning KPIs” whitepaper which can be downloaded from http://davidparmenter.com/how-to-guides)

The New Thinking on KPIs, part 1 of 4

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“Show me a company who thinks they have KPIs, which are measured monthly and quarterly, and I will show you measures that do not create change, alignment and growth and have never been KPIs”

David Parmenter
Internationally renown presenter and expert on Key Performance Indicators

From my research, very few organizations really monitor their true KPIs. The reason is very few organizations, business leaders, writers, corporate accountants, and consultants have explored what a KPI actually is. This brief paper hopefully will help you unearth what a KPI is and point where to look for them in your organization.

Let me explain what a KPI is through two KPI stories.

Hi there! This article is available for free. Login or register as a StrategyDriven Personal Business Advisor Self-Guided Client by:

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About the Author

David Parmenter, author of Key Performance Indicators: Developing, Implementing, and Using Winning KPIs and Pareto’s 80/20 Rule for Corporate Accountants, is an international presenter who is known for his thought provoking and lively sessions, which have led to substantial change in many organizations. He is a leading expert in developing winning KPIs, replacing the annual planning process with quarterly rolling planning, accelerating month-end processes, and converting reporting to a decision based tool.

David’s work on KPIs has received international recognition with clients in Auckland, Wellington, Sydney, Melbourne, Brisbane, Adelaide, Canberra, Perth, Kuala Lumpur, Singapore, Tehran, Prague, Dublin, London, Birmingham, Manchester and Edinburgh. David is a fellow of the Institute of Chartered Accountants in England & Wales and has worked for Ernst & Young, BP Oil Ltd, Arthur Andersen, and Price Waterhouse Coopers.

David’s recent thinking is accessible from www.davidparmenter.com. He can be contacted at [email protected] or telephone +64 4 499 0007.

This articles is an extract from his “Implementing winning KPIs” whitepaper which can be downloaded from http://davidparmenter.com/how-to-guides)

StrategyDriven Podcast Episode 10 – Core Performance Measures

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StrategyDriven Podcasts focus on the tools and techniques executives and managers can use to improve their organization’s alignment and accountability to ultimately achieve superior results. These podcasts elaborate on the best practice and warning flag articles on the StrategyDriven website.

Episode 10 – Core Performance Measures elaborates on Organizational Performance Measure Best Practice 4 – Core Performance Measures. This discussion…

    • defines what core performance measures are
    • identifies the benefits of employing a performance measurement lattice
    • describes the guiding principles used to create an organizationally aligning measurement system

Podcast: Play in new window | Download (24.8MB)

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StrategyDriven Podcast Episode 9 – Horizontally Shared Organizational Performance Measures

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StrategyDriven Podcasts focus on the tools and techniques executives and managers can use to improve their organization’s alignment and accountability to ultimately achieve superior results. These podcasts elaborate on the best practice and warning flag articles on the StrategyDriven website.

Episode 9 – Horizontally Shared Organizational Performance Measures elaborates on Organizational Performance Measure Best Practice 2 – Horizontally Shared. This discussion…

  • defines what horizontally shared performance measures are
  • identifies the benefits of employing shared measures
  • describes the steps taken to create comparative measures

Podcast: Play in new window | Download (15.3MB)

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StrategyDriven Podcast Episode 8 – Vertically Cascading Organizational Performance Measures, part 3 of 3

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StrategyDriven Podcasts focus on the tools and techniques executives and managers can use to improve their organization’s alignment and accountability to ultimately achieve superior results. These podcasts elaborate on the best practice and warning flag articles on the StrategyDriven website.

Episode 8 – Vertically Cascading Organizational Performance Measures, part 3 of 3 elaborates on Organizational Performance Measure Best Practice 1 – Vertical Cascading. This discussion focuses on how to assess a performance measurement system for completeness and align it to individuals at various levels of an organization.

Podcast: Play in new window | Download (18.7MB)

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