• Apr 09, 2015
• Comments Off on A KPI ‘Starter Kit’ – If You Only Measure 6 Things
• cathlavery

A KPI ‘Starter Kit’ – If You Only Measure 6 Things

When you are getting started with Performance Measurement it’s tempting to seek out a readymade set of KPI to use.  I’ve written before about the dangers of choosing your KPIs without putting the work in, but while you are designing the best Process Measures for your organisation, there are some things that are useful to measure in any company.  Don’t spend too much time tailoring them to your business, just start testing them.  You’ll learn far more about the best measures for your company starting with something rather than waiting until you have the best measures.

The first three KPI measures are related to the stakeholders: customers, employees and owners. The second three are related to the organisation’s processes.

KPI 1 – Customer Satisfaction

As Stacey Barr from PuMP® says: “If customers aren’t happy, then everyone is wasting time doing the wrong thing, or doing the right thing wrongly.”

Measure how your customers perceive the outcome of your product or service, through short, sharp surveys or quick questions at the end of each transaction.  You can ask all customers, or just a random sample of them.

KPI 2 – Employee Satisfaction

Employee Satisfaction can be a driver of every other performance result. If employees are unhappy it can be hard for them to care about the performance of the organisation.  The simplest way to measure how employees feel about their work is to ask them.

KPI 3 – Cash Flow

In business, no financial measure should stand on its own, but one of the useful ones that any organisation can learn from is Cash Flow – total cash in minus total cash out over a set time period.

KPI 4 – Product/Service Defects

Defects is a measure of quality.  Translate what your customer expects your product or service to do, into something you can count.  Then assess how often you achieve this and miss it (have a defect).

KPI 5 – Cycle Time

This KPI is the time it takes to produce or deliver your product or service for your customer is a useful thing to measure.   As well as ensuring you meet the time commitments you made to your customer, it focuses your team on assessing what adds up to make the Cycle Time.

KPI 6 – Wasted Time

Building on from your Cycle Time measurements, Wasted Time is a measure of how much time you spend doing things that don’t add value, e.g.:

–          rework

–          distractions

–          delays

–          duplication

Remember, these basic measures are a starting point, not a solution.  By using these measures you should become comfortable measuring and come closer to understanding what KPI you really do need to measure.