Jan

19

Webcast “Implementing KPIs – a twelve step process”

January 19, 2008 | Leave a Comment

Below are some questions and answers from the webcast I did for bettermanagement.com “Implementing KPIs – a twelve step process”" the other day. It will be available online in a few days and it is free to register and listen to the archived copy. This is the largest webcast bettermanagement.com has had, with over 800 people registered.

I’ll have another update with a few more questions and answers soon.

Is this presentation in an Enterprise Data Warehouse or an Operational silo context?

An operational system and their linkage to the intranet are critical for the monitoring of daily/weekly KPIs. Airlines will know up to the minute, which planes are late and by how long. And this data will be available to all staff including key suppliers so that late planes can be brought back on time.

Who should head the KPI team?

An individual who finishes what they start, has a good reputation in the organisation, outstanding motivator, and last but by no means least, a great salesperson. Never underestimate the selling component of this project.

Don’t you believe the requirements to make KPI’s a reality through your steps is unrealistic? CEO committed… Business Owners taking two days to define KPI’s… Time available for marketing your project… long timeframe…

Certainly, over the last 20 years, well over 50% of performance measurement initiatives have failed miserably. I’ve heard it said that over 75% of Balanced Scorecards aren’t working. Millions upon millions of dollars are being invested in measuring and reporting performance which doesn’t change one heartbeat of the organisation. This has to stop. Organisations will be better off without it, than with this comfort layer that does nothing.

I totally agree with the sentiment in your argument. Many organisations through substandard Senior Management who are only experts in firefighting, haven’t a hope of putting in such a project. To those middle managers who can see the benefits of my work,I’d suggest to you, to wait till the SMT changes, or move to the many organisations that do exist where the Senior management are well read and informed.

I recently spoke to 450 Chief Executives in Kuala Lumpur. Each of these executives had signed up for one day a month mentoring. These CEOs were certainly much better informed and motivated than CEOs who barely have one day of training a year. When they do attend a course,are playing around with their PDA during the day. It occurs to me that many members of the SMT have believed that learning has stopped once they get on the SMT. They often believe there is no need to have anything more than a breakfast session update from a business thought leader.

What technique do you recommend if it is highly unlikely or not feasible to get senior management together for the workshops?

Don’t start the project. You need to do more selling. When they understand what you are talking about, they will want to be there.

Do you have any examples of KPIs used in the publishing and broadcasting businesses?

First lets talk about what the CSF are. One might be publication /broadcast are adequately vetted. Another might be, “we are a news leader”, and so on. We would need then to workout what the top 5-8CSFs are, as set out in step 6. A KPI might be, “how many breaking-news stories our competition releases before us, each week, compared to vice versa” (with the names of the journalists involved) ““ this might lead to some headhunting.

Why wouldn’t an organisation identify CSFs before KPIs? Doesn’t the organisation want to select KPIs that monitor inputs into CSFs?

I agree with your logic, but unfortunately life isn’t; logical. Too many life measures are dreamed up when a corporate accountant or HR manager has an afternoon free.

What if you are trying to implement, at the same time, 2 very important elements i.e. BSC AND Social Responsibility Performance Measurement – how difficult would this be?

I believe social responsibility is not separate from good corporate performance. The two are hand in hand. Current and future customers are living in the community, and therefore any Balanced Scorecard initiative should have a perspective called “environment and community”. Please listen to my early webcast as I explain the benefits of this perspective.

Can we undertake this task if the CEO insists on delegating the role?

If the second in charge to the CEO has the ear and support in all cases, it is possible. However, we need to change the job description of the CEO to ensure that all future CEOs have a working background with Balanced Scorecards.

SMT means what?

In all my presentations SMT means the Senior Management Team

Forgive me – what does BH stand for?

In all my presentations, BH stands for Budget Holder ““ a person who has a budget to spend.

What does PR stand for?

In all my publications, PR stands for public Relations. These are the experts who write the chairman’s annual report, your major promotional documentation, prepare senior management for interviews with the public, etc.

This is all well and good for the implementation of “KPI’s”, but the other-side of the coin is, choosing the correct KPI’s. How can the correct choice of KPI metrics be assured? – What makes a good KPI?

It is important to get the correct CSF. Without those, its like finding a dropped engagement ring on the ocean floor. Please look at my earlier work on the 7 characteristics of KPIs.

In the case of a long term project, will the KPIs be put on the tasks? activities? deliverables or the finishing of the project?

KPIs are not project based, they are based on the organisation. Certainly, one KPI will be late projects, and this will be reviewed weekly. The CSF would be “we finish what we start”. Projects will have measures in themselves, but they will not be KPIs, but PIs and RIs as they are not fundamental to the organisations, and will not meet the 7KPI characteristics.

How relevant is the size of the organisation for the implementation of a project of this nature – it may be much easier to implement it in a company of 500 staff but what about a company which encompasses 30,000 staff?

Most certainly a 30,000 staff member organisation is an enormous project. However, through piloting the process, in two or three of your faster and agile businesses, you will have created a no win situation for the business units who do not want to adopt this methodology. In essence, a 30,000 employee organisation will be made of a number of Balanced Scorecard initiatives, each one to be done in the 16 weeks.

What do we do with our existing KPIs?

Most of your KPIs just need to be reclassified, some will be PIs,RIs, and some will be KRIs. Please read my earlier paper and chapter 1 in the book.

How do you distinguish a KPI from a metric, do you have a rule of thumb?

Please look at my earlier work on the 7 characteristics of KPIs.

Many of the recommendations are geared for large complex organisations. Do you have any advice for small companies of less than 100 people?

See my 8 step process in the Dec. ’07 webcast, “Implementing KPIs in Smaller Organisations”" see the answers to questions on that webcast.

How do you apply this to public sector organisations that provide regulatory compliance and that may not directly contribute to the bottom line?

The Balanced Scorecard initiative works just as well with public sector organisations. There are no need to change the titles of the 6 perspectives set out in the book, and in my papers (see bettermanagement.com). The major difference is the wording of the CSF and thus the measures.

Who should be in the KPI team?

The KPI team should be a mix of individuals who have a broad skill base. I refer you to the team checklist I have in the book, see chapter 4. It is desirable to have someone from HR, Finance,Operations, other parties should be IT, Planning, Operations Research. All of these individuals must be able to facilitate a one day workshop and be above average communicators. This project team is no place for a person who hides behind emails.

How does the action plan to implement KPI’s within the organisation change when the push is coming from the CEO level down rather than the other way around?

The push has to come from the CEO. What I don’t think works is when you establish the CSFs and then the performance measures in head office, and then start using them without staff understanding what’s going on. We have been doing this way since Charles Dickens times and it has seldom worked!

If due to factors beyond your control, monthly is the most frequent you can measure KPIs, do you have any advice on how to still create a meaningful KPI given this limitation?

There isn’t a meaningful KPI on a monthly basis. They are performance indicators and result indicators. They will be of interest, but will never change anything. All organisations can measure performance during the month. If management doesn’t think its possible, maybe they are a bit tired and need replacing.


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