Key Performance Indicators (KPIs)

By: Monica Moawad

What are Key Performance Indicators?

Key metrics

Different types of measures

Determined by a business’s goals and objectives

Aid decision-making

Why KPIs are Important?

Provide information on the performance of key business activities

Track progress of key business activities

Who Uses KPIs?

Usually used by managers of different departments within a business

Employees

Types of KPIs1. Leading indicators – indicators that measure a

business’s possible future events– E.g. Customer satisfaction ratings

2. Lagging indicators – indicators that measure a business’s past events

– E.g. Profitability

3. Qualitative indicators – indicators that provide observations of specific things

– E.g. Customer loyalty

4. Quantitative indicators – indicators that provide numerical results on specific activities

– E.g. % of new employees that stay in a business for a specific time

Types of KPIs1. Leading indicators – indicators that measure a

business’s possible future events– E.g. Customer satisfaction ratings

2. Lagging indicators – indicators that measure a business’s past events

– E.g. Profitability

3. Qualitative indicators – indicators that provide observations of specific things

– E.g. Customer loyalty

4. Quantitative indicators – indicators that provide numbers on specific activities

– E.g. % of new employees that stay in a business for a specific time

Steps Managers take when Implementing KPIs

1) Identify core business activities

1) Identify key measurements for activities

1) Develop key measurements for activities

1) Implement key measurements to analyze activities

Steps Managers take when Implementing KPIs

Steps Managers take when Implementing KPIs

Steps Managers take when Implementing KPIs

Steps Managers take when Implementing KPIs

Examples of KPIs

Productivity– Dollar revenue from new customers

Quality– Percent returns, customer complaints

Profitability– Profit contribution by customer segment

Examples KPIs (Cont’d)

Recruitment – Average time to recruit

Employee development– Average training costs per employee

Environmental– Amount of energy saved due to conservation

and efficiency improvements

Examples of eCommerce KPIs

% online positive comments– i.e. A business that wants to improve its online

reputation system

# of followers on social media platforms– E.g. Facebook

% customer transactions via Internet– i.e. A business that wants to eliminate physical

stores

% subscription renewal– E.g. Netflix

Approaches to Developing KPIs

Balanced scorecard

Create a list of goals

How are KPIs Organized and Reported?

KPI dashboard

Excel

KPI Challenges

Identifying the right KPIs that help the business achieve its goals and objectives

Gathering the right data for the identified KPIs

KPI Advantages

Gives top managers information on the progress of a business over time

Gives managers of different departments information on the progress of their departments over time

Reliable basis for action

KPI Disadvantages

Might be misleading if it is not the right KPI for the task

Data overload

Interesting Quotes

“Not everything that can be counted counts, and not everything that counts can be counted.” - Albert Einstein

"You get what you measure. Measure the wrong thing and you get the wrong behaviors.” - John H. Lingle

Time’s Up!

OAbout your speaker:OName: Monica MoawadOEmail: monica.moawad@utoronto.ca

Thank You for Listening

References

• Images:– http://www.kaizen-analytics.com/2008/11/defining-actionable-business-

driven.html

– http://www.inetsoft.com/images/screenshots/exec_sales_dashboard.png

– http://www.cartoonstock.com/lowres/dcr0293l.jpg – http://www.m-g-e.org/wp-content/uploads/2011/04/Support-not-Reports-

A-new-way-to-think-about-Management-Information..jpg– http://www.epmreview.com/Experts-Zone/Cartoon-Corner/KPI-Door.htm

l– http://www.sqaki.com/7/BalancedScorecardKpi/screenshot.gif

References (Cont’d)

• Information:– http://www.davechaffey.com/Internet-Marketing/C4-Strategy/leading-lagging-performance-indic

ators-ecommerce/– http://chiefmarketer.com/crm_loop/performance-indicators-062806/– http://www.ap-institute.com/Key%20Performance%20Indicators.html– http://smallbusiness.chron.com/planning-kpi-4607.html– http://www.simplybusiness.co.uk/knowledge/articles/2010/07/2010-07-26-key-performance-

indicators-measuring-the-success-of-your-business/– http://www.clickz.com/clickz/column/2074940/quotes-analytics-success– http://corpslakes.usace.army.mil/employees/perform/quotes.cfm– http://www.balancedscorecard.org/BSCResources/AbouttheBalancedScorecard/tabid/55/

Default.aspx– http://www.information-management.com/issues/20041001/1011028-1.html– http://rapidbi.com/created/samplekeyperformanceindicatorskpi/– http://www.smartkpis.com/kpi/functional-areas/online-presence-ecommerce/