This document discusses key performance indicators (KPIs) and how to identify, measure, and monitor them. It provides the following information: - KPIs are used to understand how local goals align with overall objectives and to measure key elements of processes. They are part of policy deployment. - KPIs can be used at the local level to monitor outputs and goals, as part of understanding customer needs, and to align with business objectives. - When choosing KPIs, considerations include existing metrics, how customers define quality, and whether changes would impact customers. Metrics should be important, easy to measure, and enable appropriate actions.

1. Key Performance Indicators
Identifying and using KPI
26 JAN 2015, Slide 1

2. KPI - Content
What is it for?
• Understand how KPIs are deployed as relevant local goals
• Used to identify, measure and monitor the performance of key
elements of the process
• KPI’s are part of policy deployment
Where could I use it?
• At the local level to monitor process outputs and
performance against scorecard
• As part of listening to the Voice of the Customer
• To monitor shared goals and objectives
• Alignment to the business objectives – links to the
Voice of the Business
26 JAN 2015, Slide 2

3. How do I use it?
• Questions to ask when choosing a KPI
• Evaluating metrics
• KPI’s for a service process
• CTQ tolerance limits
• Process metric worksheet
Risks and how to avoid them
• Use of existing data which may not be
relevant
• Cheating
• Costs versus benefits of collecting data for
the metrics
26 JAN 2015, Slide 3

4. Uses of this tool:
•KPI’s are used to measure and monitor our performance against the
characteristics which we determine are critical for us to deliver our
business plan
•Used at different levels from long term objectives, through shared goals
and down to local level
•At local level we will often use the Voice of the Customer (VOC) to help
identify our process metrics
KPI - What is it for?
26 JAN 2015, Slide 4

5. Expected Benefits:
•Gives alignment across the organisation when
used in conjunction with a longer term business
plan
•Provides clear focus for the policy deployment of
this plan
•Helps identify where there are shared goals and
objectives across all functions
•More specifically, at a local level it is an essential
tool in monitoring and controlling our processes,
and driving improvement in the areas which will
increase the satisfaction of our customers
•Clear and well defined KPI’s will give us sound
baselines from which to continue to improve our
performance
26 JAN 2015, Slide 5

6. Some questions to ask when selecting a KPI
▪ Do we have existing measures in use within our business or process that can
be used?
If NO, then develop a measure and ask:
▪ Does the measure match how the customer defines the process quality?
▪ If performance changed, as reflected through the measure, would the
customer ‘feel’ the impact?
▪ Does the measure define success and failure?
▪ Will it provide an insight into ‘defect rates’?
KPI - How do I use it?
26 JAN 2015, Slide 6

7. Evaluating metrics
Criteria for evaluation of process metrics:
Importance: Are you measuring the things that really matter?
Ease: Does the measurement ‘flow’ from the activity being monitored?
Actionable: Can the metric initiate appropriate actions?
Examples:
EfficiencyEffectiveness
A measure of how well the
process step meets or exceeds
customer requirements
A measure of resource
utilisation in the process step
Defects
Complaints
Billing accuracy
One touch transactions
Cost per transaction
Time per process step
No. of staff per process step
Bill of materials per process step
KPI - How do I use it?
26 JAN 2015, Slide 7

8. For a service process
Not necessarily delivered as fast as
possible but rather delivered
consistently against expectations
held by or set for the customer.
On Time
Sustaining a balance of
thoroughness, efficiency and
positive experience across all
encounters with the customer
On Quality
Decision / action cycle time
Response time
Recovery time
Timelines met
No ‘dead’ time
SPEED
Correctness and clarity
Completeness and closure
Fairness and consistency
Knowledge of the service agent
Empathy of the service agent
ACCURACY
KPIs are Based on Speed and Accuracy
KPI - How do I use it?
26 JAN 2015, Slide 8

9. KPI - How do I use it?
CTQ Tolerance Limits
▪ In manufacturing, customer tolerance limits
come from technical specifications
▪ For services, tolerances are based on data
regarding customer needs and ‘frustration’
levels as discovered through the Voice of the
Customer
▪ Set limits at the point where customer
satisfaction begins to noticeably fall off
▪ This is driven by what the customer feels
is acceptable, not by what you think is
economically feasible
▪ The limits around the CTQ become your
target zone for consistent process
performance
Lower
Upper
Perceived
Customer
Value
Requirement
Delivery to Schedule (days)
LSL
USL
Customer
Requirement
- 4 + 1
“Delivery from 4
days early to 1 day
late is OK for me.”
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11. 26 JAN 2015, Slide 11