Lean & Operational Excellence

Key Performance Indicators (KPI’s)

A Key Performance Indicator (KPI) is a measurable value that demonstrates how effectively a company is achieving its key business objectives. Organizations use KPIs at multiple levels to evaluate their success at reaching targets. High-level KPIs may focus on the overall performance of the business, while lower level KPIs may focus on processes in specific departments such as Sales, HR, a certain manufacturing cell or hospital wards.

One of the most important things to consider is what the establishment and communication of KPIs means to an organization. Just as the name implies, these are the key metrics for the organization/cell/area, so it’s vitally important that everyone knows what they mean and how they should be supporting them.

In terms of developing a strategy for formulating KPIs, it helps to start with some overview-style questions:

  • What are our organizational objectives?
  • How do we plan on achieving them?
  • Who can act on this information?
  • What is our desired outcome?
  • Why does this outcome matter to the organization?
  • How are we going to measure progress? How often?
  • Who is responsible for the business outcome?
  • How will we know we’ve achieved our outcome?

We can help facilitate this iterative planning process to ensure feedback is garnered and considered from a cross-functional group. As more data is learned, you will gain a better understanding of which business processes need to be measured with a KPI dashboard and with whom that information needs to be shared. That said – not everything needs to be measured, nor should it. We like to advise our clients to focus on the vital few, not the trivial many.