webinar: kpi selection and management
TRANSCRIPT
Housekeeping • Slides will be available on our SlideShare page; the link will be
emailed to you
• Recording of the webinar will be available to download; the link will be emailed to you
• Please complete the post-webinar survey that will pop up at the end
• You can type your questions throughout the session
• Time will be allocated in the end for the speaker to address your questions
Your Presenter
Tom is the founder and director of – it’s all about people – a Human Capital Consultancy based
in Dubai. Tom has over 30 years’ international HR experience in senior line roles, mostly
recently on the divisional board of Arc International, and with such companies as British
Aerospace, Sedgwick Forbes, British Gas and the Nazer Group, based in Jeddah. In addition, he
has extensive consulting experience working for Towers Watson, Arthur Andersen and MEIRC.
He has lived and worked in the Middle East for over 18 years and has also worked across
Europe, Africa and Asia.
He has extensive experience in HR strategy, processes and systems, organisational redesign,
performance, compensation and benefits, change management and leadership development.
Value of Performance Measurement
A higher percent of measurement managed companies were identified as industry leaders:
Source: American Management Association
74% 83%
97%
44% 52% 55%
0%
20%
40%
60%
80%
100%
Me
asu
re o
f S
ucce
ss
Measurement-Managed Organizations
Non-Measurement- Managed Organizations
Perceived as an Industry Leader Over the Past Three Years
Reported to be Financially Ranked in the Top Third of Their Industry
Last Major Cultural or Operational Change Judged to be Very or
Moderately Successful
Measuring Performance
• A key tool to link strategy with implementation
• It ensures the business is delivering
• It helps in decision making and review
• Need to invest money & resources into measuring
company performance
• Strategic performance management systems will
deliver the strategy through:
• Objectives
• KPIs
• Targets
• Incentives
Setting & Managing Objectives & KPIs
• Fewer are better: concentrate of key aspects
• Should be linked to key business drivers
• Should be based around the needs of customers,
shareholders and other key stakeholders
• Should start at the top and flow down
• Multiple indices can be combined into a single index
• Objectives and measures may need to change or
adjusted as environment and strategy changes
• Measures needs to have targets based on research
rather than arbitrary numbers Brown M G (1996) Keeping Score
Linking Business Strategy with
Employees
"A mere 7% of employees today fully
understand their company's business strategies
and what's expected of them in order to help
achieve company goals.“
Robert S. Kaplan and David P. Norton, "The Strategy-Focused Organization,"
Harvard Business School Press, 2001
Performance Measurement in the
Middle East • Not consistent in development and application
• More interested in doing than planning
• No real culture of performance measurement
• Not experienced in establishing objectives and KPIs
• Objectives and KPIs are often vague
• Little follow up in terms of weekly or monthly meetings
• Use them as checks rather than to manage the
business
Middle East Management Style
Management style has a big impact of how strategies
are implemented:
• Leadership: authoritarian
• Organisations: bureaucratic & centralised
• Decision making: slow, risk averse and made at
the top
• Performance evaluation: lack of objectivity, lack of
measurement
• Relationships: very important not linked to
performance
Structure of Performance Management
A culture of
responsibility,
authority, and
accountability
An integrated,
continuous cycle rather
than a one-time event
Alignment of
people, processes
and technology
with strategy Performance
Management
Culture
Performance
Management
Cycle
Performance
Management
Infrastructure
Vision Mission
Drivers
Market
Differentiators
Strategic
Goals
Department
Objectives
To become a leading regional industry
and related national services supplier; the
preferred choice for total customer
solutions; and the shareholders’ choice
for long-term growth and investment
value
Positive company
image
Continuous improvement
in operations
Highest standards of business
conduct and community
service
Provide competitively priced, high quality
products and services in the areas of sales
and service, delivery, supply, service, and
an expanding range of regulated and non-
regulated supplemental services related to
our core business
Improve customer loyalty through
increased customer satisfaction, brand
awareness and reputation
Deliver high quality, profitable solutions at competitive prices
Motivate and enable employees
to achieve superior performance
Enhance Shareholder Value by improving credit
worthiness, minimizing stranded investments,
and realizing savings
Seek alliances that will achieve superior customer solutions to meet current and
future market needs
Enhance SVA long term by growing the business
Comprehensive solution
provider
Superior customer
service
1................
2................
3................
1................
2................
3................
1................
2................
3................
1................
2................
3................
KPIs
Strategy Articulation Map
Performance Management Cycle
Set Measures
and Targets
Reward and
Coach
Plan and
Execute
Monitor and
Evaluate
Strategy “What do we want to achieve?”
“How do we set the direction?”
“What is getting
in our way?”
“How much progress
are we making?”
“Are we
encouraging the
right behavior?”
S
M
A
R
T
pecific
easurable
chievable
ealistic
ime bound
Types of Objectives Related :-
To progress
To change
To personal development
Setting Objectives
Objectives Setting
• Clarify the corporate\departments strategy in terms of
what it wants to achieve
• Identify key objectives to deliver the departments
strategy
• Take time and reflect
• Look for causal links
• Test objective by defining the outcome
• Limit the number of objectives to 3-5
• 2-3 related to projects or key department deliverables
• 1-2 relate to new initiatives, projects or work that will stretch
the department as a whole
• Prioritise objectives & get agreement
• Use SMART test
Objectives Setting: Tips
• Don’t put an objective that is a task or input
Look at an objective in terms of what you want to
achieve
Establish your objective
Then define what the outcome is for the objective
If the required output is the same as the objective – great
If not reframe the objective around the outcome
Challenge the objective:
Is it delivering on the corporate objectives
Can you see an ‘audit trail’ to the corporate
objectives\strategy
Test it by sharing with a colleague
Setting KPIs
• Define what you need to measure to ensure you
deliver on the objective
• Identify the KEY performance indicators not ones that
are nice to have
• Limit them ideally to 2-3 per objective
• Make them very specific with timescales
• Have a tangible target, ideally numeric\percentage
• Review progress regularly (monthly)
• Have an action section to define what you will do
• Carry out a ‘reality check’ to make sure they will
achieve the objective
KPIs & Targets
• KPIs MUST have a target
• Targets can be set as:
• Absolute, such as increase by seven
• Percentage, such as an increase by 4%
• Targets should be defined
• Relative to internal benchmarks: surpass last years
results by ‘x’
• Relative to external targets: surpass competitor ‘x’ by
‘y’
• Relative to global best practice: become as good as ‘x’
by ‘y’
• KPI outlines what to measure and the target is the
amount
What to the Right KPIs
Asking the following questions will ensure that you
apply a rigorous thought process to all potential KPIs:
• Will the KPI help to deliver the (strategic) objective?
• Does the KPI help to answer specific, important unanswered
questions that help the business?
• Will the KPI enable you to make a specific decision?
• Check what the existing data and data collection there is?
• Can you get the right quality of data at the right time?
• Does the data answer the key performance question?
• Does the data help you to make decisions?
• Is the target of the KPI too easy?
• Are the cost and effort justified
Use of Traffic Signals to Manage
Progress
Major problem that objective\KPI will not
be met & needs urgent action
Some concern that objective\KPI will not
be met & should be monitored
Everything going to plan and it looks that
objective\KPI will be met
Regular review & measurement is essential
Setting Objectives & KPIs for Employees
• Define objectives (3-5) for an employee: this could be
a KPI form one of the department objectives
• Define KPIs for each objective that will be a good
measure to ensure objectives achieved
• Of the Objectives and\or KPIs:
• Have 1-3 related to critical parts of the job
• Have 1-2 that will stretch the person beyond the boundaries
of his\her job
• Don’t have KPIs that cover the day to day outputs of a
job
• Only have KPIs on job outputs that are KEY to
achieving the department\Job objectives
Good Feedback
• Be honest and open and provide support in helping to address development issues
• Be factual and specific
• Be constructive
• Agree what needs to be done to address the action, with your support
• Follow up to ensure the employee is addressing the issue