We set KPI based on Business objectives. Steps can be narrated as follows:
1. Once we select objectives, they are prioritized based on mission-critical or critical success factors or strategy (depending on organizational philosophy). For a single objective, we run a quality assurance technique called “Value Flow Analysis”. We try to find out the Best KPI from the objectives (like outcome KPIs).
Example:
Objective: Reduce child mortality rate by 10% within 2018 under the supervision of the Health Minister.
Input Metric: Budget, Doctor, Nurse, Vaccine etc.
Process KPI: $ Cost of the vaccine, % Vaccine utilization rate, $ Cost of resources, etc.
Output KPI: # Children vaccinated, % Population under vaccination program, etc.
Outcome KPI: % Mortality rate
2. When we get the outcome KPI, we balance the KPI through balancing methodology. For every KPI, there should be a balancing KPI to counteract.
Example:
1. % Mortality rate
2. $ Cost of resources
Example:
1. $ Sales
2. Cost of sales
The above example has been balanced based on Effective vs Efficient KPI.
3. We can select one KPI for each objective, two KPIs for balancing, and three KPIs at best.
4. Those Objectives should have cause-and-effect relations which can be drawn in the Strategy Map.
5. Now, if you select 6/7 objectives at the organizational level, you will have to monitor/track 12/14 KPIs.
6. Once these organizational KPIs are cascaded to the department, the following rule follows:
Business unit objectives can be cascaded at the departmental level as they are with the same or different KPIs:
Same objective- same KPIs down the line
Same objective- same KPIs + specific KPI down the line
Same objective- specific KPIs down the line
The same objective can be cascaded to more departments, each of them measuring it through different KPIs.
Some organizational objectives may not be cascaded to lower levels.
Organizational objectives are supported by specific objectives established at the departmental level, selected based on a contribution analysis.
Individual Level:
Individual-level objectives will receive cascaded objectives, and some of the objectives shall be developed from the Job Description.
Example:
An Objective and two KPIs are cascaded from the top, and the individual will develop/populate/devise 2/3 objectives that support the top. Altogether, there will be 6-8 KPIs for an individual. For more details, please feel free to contact:
Kind regards,
Md. Mostafa Kamal,
C-PA, C-KPIP, C-KPI Practitioner, CRP & CTAP
Chief Executive Officer
Savvy Consultancy and Training
M: +8801713144290
Mail: ceo@savvybd.com
LinkedIn: Md. Mostafa Kamal
Skype: Kamalsipon
