In order to create custom Key Performance Indicators (KPI) and their supporting indicators you have to plan on where you want to take your organization. You need to look at where you have been, what your strategic objectives are and how you measure success of those objectives. AND you have to have a clear understanding of the milestones that you must achieve on the way to those successes.
Performance indicators are powerful tools that can assist in shaping the behaviours of your staff and guide the direction of the company. So it is important that the direction is set and the indicators are aligned with the plan. This is one of the reasons that we recommend a holistic approach to developing key performance indicators so they work in concert with your organizations plan, people and processes. We use our Delta P4 Methodology to accomplish this.
When you get down to actually creating the performance indicators the following 5 step process will assist you.
The Discovery step will involve the Kick-off of the project with meetings and communications to inform the organization and departments of what is being undertaken and the expected benefits to the organization and themselves. This is also the first opportunity to begin managing expectations of the various stakeholders to the analytics project.
During the Discovery step, the existing organization’s strategic plan and objectives will be reviewed as well as any departmental plans and objectives and business cases related to the project. As mentioned above, it is key to have alignment of the performance indicators with the plans of the organization.
During the Problem Definition step, the various stakeholder groups to the project will be identified and sessions held with representatives of the stakeholder groups to determine their needs and requirements. Hearing directly from the various groups that will be using or impacted by the analytics project will help increase the success rate of the final solution.
Once the problems and challenges have been defined the KPIs and metrics are defined. Specifically the measurements needed to support and ensure that the objectives and goals are being achieved are flushed out. As part of this process, the data currently being collected and available is reviewed to understand if there are any gaps between what is needed as measurements of success and what the current data will support. This step is best accomplished by utilizing the subject matter experts within the organization.
The Design Solution step focuses on the output of the previous steps to begin developing a solution. The purpose of this step is not for the development of the actual solution but rather developing the requirements and possibly a look and feel of what will eventually be the final solution. If there were any data gaps identified in the previous step, these are examined and potential subsequent projects are put forth for consideration to close those gaps.
The last step in the process is to review the outcomes with management and the stakeholders to ensure that a complete understanding has occurred and the correct solution(s) will be created. It is also an opportunity to step back and ensure that what is being proposed still aligns with the organization’s strategic plans.
This step is vital. If adjustments need to be made to the final proposed solution, better they occur at this stage rather than when the solution is being rolled out to the users.
Using these steps, you can create custom Key Performance Indicators that help drive your organization to achieve its goals. Remember, just as an organization will review their strategic plan annually to ensure that it is relevant and still steering them in the right direction, the Key Performance Indicators also need to be reviewed to ensure that they are still relevant and aligned with the plan, people and process of the organization.