KPIs are high level, so are different from day-to-day management data, scorecards, etc – ie they are not every day ‘Performance Indicators’, Ratios, or Variance Analyses which are produced for a specific manager so they can analyse, manipulate and make tweaks to systems and processes.
Create a successful SME KPI Dashboard – follow these 6 simple steps:
1. Work out the audience and their objectives
KPIs are to be reviewed and shared – they are a Summary used as a way of keeping an eye on important areas and activities, but not used to run those areas and activities on a daily basis…Did I say “summary”?, it is worth repeating… The audience of KPIs is most likely up one level from the activities being reported on – so when producing your KPIs you need to ‘tier’ them. Thinking about the various levels of management, and who is reading the report is vital – then rethink your business information levels of detail to match the tiered pyramid structure of management.
Detail should be decreased as you move up that structure to avoid information overload and engender responsibility at the lower levels.
Remember: One manager’s critical Key Performance Indicator will be unimportant, including to too much detail, for another manager higher up the organisational tree.
Each audience will have different objectives to achieve, and these need to be teased out and clarified before the relevant KPIs can be applied – ideally you will come up with 2-3 objectives for each group you are reporting to. Spend some time understanding exactly what is critical to your audience’s success. Staff and departmental objectives will ideally will stated in a strong business strategy or plan, (it may help to think in terms of ‘what does this group or person need to do to get their bonus or be promoted?‘). However, if objectives are hard to tease out refer to Setting Business Objectives.
2. Be Clear about the Message
When creating your KPI Reports two messages are vital Key and Indicator.
Addressing the Key part – include only 6 to 8 KPIs on any one report – more than 8 begins to create a level of detail that undermines the primary relevance of the indicators.
Addressing the Indicator part – well-designed KPIs only deliver a message that will instigate one of two decisions; either ‘do nothing’ or ‘investigate’!
Recognise a KPI’s job is to tell you one of these three things:
- Things are looking bad
- Things are looking good
- Things are OK
For a KPI to be useful they also need to enable easy decisions and instigate action in each of these scenarios.
- Things are looking bad: Decision = need to investigate, Action = ask for more information
- Things are looking good: Decision = need to investigate, Action = ask for more information
- Things are on Track: Decision = no need to investigate, Action = none required
If your indicator is revealing more information than that is probably too low level, therefore not a KEY Performance indicator; it is not acting as an “Indicator” of performance but providing information about how and why the outcome happened.
So, taking into account the audience and understand what objectives they are trying to achieve will help you work out what messages your indicators need to be providing.
By the way, if the information on any report you have is not enabling decisions DITCH IT! – see Create useful reports – not more data…!!!