Facilitating a KPI development session

The intense competitive environment in which businesses operate today makes it imperative to have a timely feedback loop to communicate operational signals to key decision makers.

Key performance indicators represent a significant arsenal in the toolkit that companies are using to address this challenge. However, several companies continue to limit their potential by taking a shotgun approach to KPI selection.

KPI selection and adoption should be a well thought out process with periodic refinements based on market and operational realities. A facilitated KPI development session is an effective way to start this process.

There are four fundamental keys to offering a successful session:

• Partnership with staff, unions, key suppliers and key customers.
• Transfer of power to the front line
• Measure and report only what matters.
• Linking performance measures to the strategy through Critical Success Factors.

As a facilitator, your role is to mentor and not to lead projects.

You will need to be prepared to address the following questions:

• Why performance measures are being introduced.
• How performance measures will be used.

Throughout those broad categories, you will be faced with very specific questions. Some of those types of questions you may anticipate and suggested responses are described below.

Why are we being asked to cooperate in introducing performance measures?

Emphasize that the way these performance measures will be used will be quite different from previous applications.

Unlike top-down management of performance measures, employees are in the middle of this initiative.

Also explain how the performance measure fits with other strategies, especially ongoing initiatives with high visibility across the company (examples are customer focus, quality improvement, etc.)

Why does management need new performance measures?

Emphasize that the new focus is for everyone in the organization, not just management. Emphasize that these new measures are broad-based to allow everyone to focus on what determines the health and success of the organization.

This is seen in relation to customer focus, financial performance, learning and growth, internal process.

Who will decide what is measured?

Each functional team must decide what is measured. They should focus on three criteria:

• How can the team affect the critical success factors of the organization as a whole?
• Ease of use of the measure and ability to take action based on the information provided
• Research process by the KPI team and senior management team.

How many performance measures do we need?

There is no perfect number of KPIs. However, please note the following:

• Have you covered all the critical success factors?
• Can you easily maintain the number of performance measures you propose to use?
• Does each particular performance measure provide useful information that the team can use to analyze and improve the key processes for which it is responsible?

What happens when a KPI goal or target is not achieved?

The SMART principle is always applicable. However, when a team cannot meet the stated objective or goals, it is not a crisis.

The focus should be on analyzing why the goal could not be achieved.

Through this problem-solving approach, the team can progressively identify and remove barriers to goal achievement.