There is a wide acceptance that KPIs are “a good thing”, but what is a KPI and how is it measured.
The purpose of a KPI is provide a metric that gives an important insig
ht into a process of part of a business, but is close to the job at hand, requires little processing and gives a real time or near real-time data check away from the tyranny of the monthly P&L (which in many cases is not available until 2-3 weeks after the end of the month.
Some examples of useful KPIs are:-
- Frequency of scrap tip emptying.
- Number of stockouts
- How quickly the telephone is answered
- Sales conversion rate
- Staff turnover
There are literally thousands of KPIs that you could choose but in general I would suggest no more than 6 for any person or part of the process of your business – but which to choose. In short you choose the ones that you expect to be a good indicator (you can change it if it does not work) and it is often the simplest or most unusual that are the best KPIs.
When working in Mexico during the boom years of the late 90s one of the problems was keeping staff due to ever increasing local pay rates. Many ex-pat companies paid for expensive surveys which the poured over, but a simpler solution was to set an employee turnover rate that seemed acceptable and when that was approached pay rates were adjusted upwards. In the computer games industry the challenge is to ensure that a game is engaging for both highly skilled players and novices alike therefore a KPI was set that no player should be “kicked off” in less than 3 minutes – any game which breached this was re-worked until it was met.
If the KPIs are not obvious start with the basics of ISO9000:-
- Do we know what the customer wants
- Do we know how to deliver what the customer wants
- How do w eknow we have delivered it
and ideally use your problem reporting system to see what the problems with each item – then work a KPI out from that.