Modern KPIs to be used in top management.

Answer QuestionsCategory: ManagementModern KPIs to be used in top management.
asked 5 years ago

I would appreciate all the suggestions of modern KPIs to be implemented in top management of the Group which “owns” 4 internal entities.
 
Sorry for non precise question!
Regards

1 Answers
Aleksey Savkin Staff answered 5 years ago

What are the goals of this management group? KPIs need to be linked to some specific business context, otherwise they don’t make sense. Here is a good article on the topic.

Win replied 5 years ago

Thank you fast reply.I agree, there is a clear strategy and vision of the group. To achieve centralised management of all entities (financial department, HR department,…), meaning also KPIs should be “standardized” within separate entity. KPIs of each entity should “puzzle” bigger KPIs of the holding.Benchmarking and some case studies of users would be appreciated.Regards

Aleksey Savkin Staff replied 5 years ago

I really like Balanced Scorecard approach in this sense, and according to the Balanced Scorecard the strategy with business goals, cause and effect connection between them are what matter.KPIs (or better say metrics), are also important but:1. The project can be started without 100% of metrics ready and it is much better than using indicators that are your relevant to the strategy.2. It doesn’t make sense to introduce aggregated measures.The approach that we promote and believe is the best option for strategy execution is:1. Build a strategy map2. Cascade strategy map by business goals (not by indicators)3. Find appropriate indicators for each business goal.For sure you can use BSC Designer software for this purpose, as it helps a lot with strategy maps and KPIs.According to our experience making indicators that aggregate values of child indicators does make sense.

Win replied 5 years ago

Thank you for reply Aleksey.After research I’ve decided to follow step by step. After designing BSC with strategic map which will include cause and effect connections, I will start with Key Performance Questions which will eventually lead to proper KPIs.I’m curious if you can recommend any case studies of implementing BSC, strategic mapping and KPIs.

Win replied 5 years ago

…preferably in manufacturing industry.

Aleksey Savkin Staff replied 5 years ago

Have a look at that article: http://www.bscdesigner.com/implement-bsc-5-steps.htm it explains the implementation process in the details.

Win replied 5 years ago

Theory is pretty clear, I agree, but in a big group it is hard to follow “by the book” rules.I’m wondering how to include all departments into balanced scorecard. For example the goal of holding is to increase revenue, this depends on our processes in our internal “budgeting” department (in terms of minutes and material cost) which affects our purchasing department which results in stock/inventory (performed in our 1st entity), after it leads to transportation and after receiving goods manufacturing begins (in our 2nd and 3rd entities).I believe cascading is the process, but would appreciate Your thoughts.

Aleksey Savkin Staff replied 5 years ago

I’d solve this task with a good SLA. Visualize your processes, define some goals (if any), align some KPIs. Here is an article on the topic: http://www.bscdesigner.com/kpis-a-tip-of-the-iceberg.htm

Win replied 5 years ago

SLA are established, business is running, but no solid management control. I believe it would make sense if each entity has its own complete BSC with "common" group goal, and holding BSC will extract main KPIs from all the entities on different perspectives. Thank you for the article!I appreciate your thoughts.


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