5 ready-to-use ideas to crash test your Key Performance Indicators
Here is a short ready-to-use checklist for your winning Key Performance Indicators (KPIs), use it to test and correct indicators in your project:
KPI has a descriptive name. If you have a technical background in IT then you probably know this trick. If you open some source code you can quickly evaluate its quality just by checking the "coding style" of the developer.
For instance, if you see variables like "my_num" or "str1" then it doesn't make much sense for anyone, but the developer himself.
Use the same idea for KPI - the name of KPI should describe what it actually measures.
Certainly, you will be able to put additional information in the description text box next to the KPI, but make sure that even by reading only the title, anyone will be able to get an idea about what is measured.
Measurable. Here are two pitfalls.
Don't measure something just because you know how to measure it! For instance, managers like to measure problems in the product. If you deal with a software product your manager might ask you to measure the number of bugs you have per line of code.
Indicators like these are really popular, but they are useless at the same time and give you just a basic understanding about the process. For instance, in this case it’s better to measure the number of critical problems reported by users. In this way, you will learn more about the quality and efficiency of your development process.
When designing a new KPI, make sure that you and other members of your team clearly understand how to measure its value. Using expert opinions is a definite possibility, but your results will be less accurate.
Is the weight of KPI too important? Is there in your KPI set an indicator that has too high of a weight compared to others? If the answer is yes, then consider removing indicators with a low weight or consider dividing the indicator with highest weight value into 2 indicators. Over-weighted indicators normally show that something is wrong and unbalanced.
The sum of KPIs. What if you would need to manage your business using only KPIs you have right now? Will you have enough information for decision making? Do KPIs that you have described encompass all of the important parts of your business?
Number of KPIs. Count your KPIs and categories. If you have 4 categories and 3-4 KPIs in each category then most likely you are doing fine. If you are using a big number of KPIs that might be a bad sign. Try to group these KPIs into super a KPI that will incorporate the results of several KPIs in one.
Our final advice about getting better KPIs:
Post this article into your professional network - give your colleagues this checklist
Don't do a KPI job alone, it is a task for a team.
Get more KPI improvement ideas for free at www.winningkpi.com there are KPI professionals available to connect onto your KPI request.
If you want to become a KPI expert yourself, invest in the eTraining:
Manage your KPIs with BSC Designer software