kpi mahsa sharifi 2012

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Provided by : Mahsa Sharifi.

Email Address: Sharifi_mahsa@yahoo.com

What is KPIWhy is it good for you

Measuring performance

• Measuring something is the best way to make it improve,

• if you don't measure, you don't really know what's going on.

• To Evaluate • To Control• To Budget• To Motivate• To Promote

KPI Examples and Templates.

• KPIs, metrics, and ratios for any department in your organization. Key performance indicators (KPIs) do exactly what their name suggests: they provide an indication of your performance by measuring key processes. By monitoring the right KPIs, you can gain valuable insight into your performance and make the adjustments needed to optimize your performance.

• they provide an indication of your performance by measuring key processes

• The challenge is knowing which KPIs are most important to monitor to get the results you want. That's why we've put together this list of KPIs for each department in your organization. Each KPI should come with a definition, calculation, and example.

• The challenge

Categorization of indicators

• Quantitative indicators which can be presented as a number.

• Practical indicators that interface with existing company processes.

• Directional indicators specifying whether an organization is getting better or not.

• Actionable indicators are sufficiently in an organization's control to affect change.

• Financial indicators used in performance measurement and when looking at an operating index.

Managers should know the answers…

Why are KPIs important?• Managers are overwhelmed

and distracted with day to day activities and tasks.

• Managers must make important decisions, quickly, with greater consequences, and often with limited information on hand

• Managers concentrate on the tactical decisions and neglect the strategic ones

KPIRow # Progress Change

EX # of new customers

95% Complete % change increase in sale

Sources Database Project Plan Database

Frequency Monthly Quarterly Monthly

Target

Problems

Still Not convinced ?Why KPI ?

• Say ‘Yes’ to Key Performance Indicators (KPIs) Because Guess Work is for D!

KPIs give you a complete picture of plan vs. actual results.

KPIs give you a complete picture of plan vs. actual results.

KPIs should focus on a single strategy

• KPIs should all be linked to the strategy• • KPIs should be consistent• • KPIs should be mutually reinforcing

Measuring performance !

How should KPIs be used?

• Communication• • Informing• • Diagnostic• • Learning

• • NOT controlling

Strategy Goal Drivers Measurement

customer Improve customersatisfaction

Decrease lead timeDeliver on time

Average Lead Time% deliveries on time

Internal Business Continuously improvebusiness processes

Decrease Cycle TimeIncrease QualityIncrease Productivity

Average Cycle Time# of Defects; % ReworkOutput per employee

Financial Continuously ImproveFinancial Performance

Decrease CostsIncrease Sales growthIncrease Market Share

Average Unit costsGrowth Rate in SalesMarket Share

Innovation and learning

Deliver new Productsand Services

Increase sales of newproducts and servicesReduce developmenttime

Some Generic KPI Measures to warm up with

You are what you measure.

• Measure. Find insights. Take action. OR die trying

You Are What You Measure, So Choose Your KPIs Wisely!

• 1. Page Views vs. Visitor Loyalty. It forces a focus on the long term and on the right entity

• 2. Revenue vs. Economic Value

Pick Economic Value, your parents will be proud of you !!!!

Economic Value is the sum of Revenue plus the Business Value created by the macro- plus micro-conversions on your website

• 3. Time on Site vs. Task Completion Rate

• # of Installs vs. 30 Day Actives

Use 30 Day Actives as your KPI. Build a stronger profitable business

Are we on the same page ?• It is important to point out that I'm not advocating that you stop measuring page views,

revenue, time on site or # of installs. They are all fine metrics. You'll most likely use them as diagnostic measures when you analyze the metrics I do recommend you shift to.

• I'm advocating that you not make them KPIs, don't crown them God, don't allow your employees to solve just for the primitive six. Because none of these six metrics incentivize optimal behavior or business outcomes.

• You become what you measure, so why not solve for what actually matters?• Let me close with a quote on incentives, from the inimitable Steve Jobs…• "Incentive structures work. So you have to be very careful of what you incent people to do,

because various incentive structures create all sorts of consequences that you can't anticipate. Everybody at Pixar is incented to build the company: whether they're working on the film; whether they're working on a potential direct-to-video product; whether they're working on a CD-ROM. Whatever their combination of creative and technical talent may be, we want them incented to make the whole company successful."

• No one could have framed it better than Steve.• Incentive structures are not a web analytics problem. They are an organization design

problem. But in choosing the optimal metrics to crown as heroes we can use data to incentivize the right behavior, value creation for a company, and deliver happiness to customer

How to implement KPIsStep 1: Define Strategic Specifics

• • Define Your Strategy• • Vision, Mission and Values

reflect strategy• • Set Goals• • Most important business

objectives• • What “drivers” are critical to

success• • What impacts driver results

(leadership, training)

How to implement KPIsStep 2: Audit Existing Measures

• • Assess strategic fit• • Identify what data is available• • Review Measurement Processes• • Accuracy• • Timeliness• • Identify Gaps

How to implement KPIsStep 3: Develop New Measures

• • Bridge the gaps, examples of strategic data• often missing:• • Employee Satisfaction Survey• • Customer Satisfaction Survey• • Rework %• • On-time Delivery %

How to implement KPIsStep 3: Develop New Measures

• • Measures must reflect performance and• progress of the business• • Must be quantifiable• • Must be compared to another number• • last year• • budget/goal• • trend• • Can be acted upon

How to implement KPIsStep 3: Develop New Measures

• • KPI title: Employee Turnover• • Defined: number of employees who resign or are• terminated for any reason divided by the number of• employees at the beginning of the year. Reductions• in force excluded• • Measured: Payroll termination report by reason• • Goal: Reduce turnover by 10%; FY 2009 objective is• 15 %.

How to implement KPIsStep 4: Analyze and Report

• • Easy to Read• • One Page Summary• • Graphs

How to implement KPIsStep 5: Continuous Improvement

• • Set Priorities base a stragegy• • SMART Goals• • Assign Accountability• • Track Improvement• • Set New Goals

Sample KPI Measures:Marketing and Sales

• • Market Share• • Leads by Source• • Number of Prospects• • Conversion Ratio• • Average Dollar Sale• • Profit Per Customer• • Sales by Product Line• • Number of• Transactions/Customer• • Customer Satisfaction

Sample KPI Measures:Marketing and Sales

• • Number of new• customers• • Brand Awareness• • Value of Brand• • Number of Customers• • Referrals• • Sales Mix• • Customer Profitability• • Number of Orders• • Customer Retention• • Reasons for losses• • Lifetime

Sample KPI Measure:Financial

• • Dividends• • Current Ratio• • Quick Ratio• • Credit rating• • Days Sales Outstanding• • Revenue• • Profit Margin• • Gross margin• • Revenue/Expense Ratio• • Variable vs non-variable• expenses• • Credit rating• • Return on Investment

Sample KPI Measures: People

• • Number of Employees• • # of mangers• • Manager/employee ratio• • Absenteeism• • # new employees• • Hours or $ of training• per employee• • Ratio direct to overhead• employees• • Cost per new hire• • % employees fully• trained

Things Every OwnerShould Know

• The profitability of the business depends on

how well the employees consistently perform critical activities.• Employees perform best

when theyunderstand how their performance affects the bottom line, and how their performance is measured.

Things Every OwnerShould Know

• Small changes in critical areas can have a great impact on the bottom line.

• What gets measured gets done, and what gets rewarded gets done again.

Problems of experts.• In practice, overseeing key performance indicators can

prove expensive or difficult for organizations. Some indicators such as staff morale may be impossible to quantify. As such dubious KPIs can be adopted that can be used as a rough guide rather than a precise benchmark.

• Another serious issue in practice is that once a measure is created, it becomes difficult to adjust to changing needs as historical comparisons will be lost. As such measures are kept even if of dubious relevance, because history does exist.

• Comparisons between different organizations are often difficult as they depend on specific in-house practices and policies.

Sample KPI Trend Report

Sample KPI Report Template

NOW please prepare KPI of your own department.