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KPI

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1. KPI Key Performance Indicators Tell me how You manage a business and Ill tell you how you are A Personal View Rafael Esguevillas Ruiz…
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  • 1. KPI Key Performance Indicators Tell me how You manage a business and Ill tell you how you are A Personal View Rafael Esguevillas Ruiz http://es.linkedin.com/in/rafaelesguevillasjueves 21 de junio de 2012
  • 2. ✓Introduction ✓What Are Key Performance Indicators (KPI) ✓Key Performance Indicators Reflect The Organisational Goals ✓Key Performance Indicators Must Be Quantifiable ✓Key Performance Indicators Must be Key To Organisational Success ✓Good Key Performance Indicators vs. Bad ✓What Do I Do With Key Performance Indicators?jueves 21 de junio de 2012
  • 3. Introduction Key Performance Indicators (KPI) Or Key Success Indicators (KSI) ➡We have the mission ➡We have identified all the company stakeholders ➡We have the company goals ➡We need a way to measure progress toward those goals Key Performance Indicators are those measurements KPI | Rafael Esguevillas Ruiz [http://es.linkedin.com/in/rafaelesguevillas] | 21/06/2012jueves 21 de junio de 2012
  • 4. What Are Key KPIs are quantifiable measurements, agreed to beforehand, that reflect the critical success factors Performance Indicators of an organisation (KPI)jueves 21 de junio de 2012
  • 5. KPI Could Be Depending on the Organisation could be • The percentage of its income that comes from return customers • A school may focus on graduation rates of its students • Percentage of customer calls answered in the first minute • Number of clients assisted during the year KPI | Rafael Esguevillas Ruiz [http://es.linkedin.com/in/rafaelesguevillas] | 21/06/2012jueves 21 de junio de 2012
  • 6. They must reflect the organisations goals They must be key to its success KPI Must Be They must be quantifiable (measurable) KPI | Rafael Esguevillas Ruiz [http://es.linkedin.com/in/rafaelesguevillas] | 21/06/2012jueves 21 de junio de 2012
  • 7. The definition of what they are and how they are measured do not change often The goals for a particular KPI may change as the organisations goals change, or as it gets closer to achieving a goal KPI | Rafael Esguevillas Ruiz [http://es.linkedin.com/in/rafaelesguevillas] | 21/06/2012jueves 21 de junio de 2012
  • 8. Key Performance Indicators Reflect The Organisational Goalsjueves 21 de junio de 2012
  • 9. [Business Company] We want to be the most profitable company in our industry • Good KPI will be • Pre-tax Profit • Shareholder Equity • Bad KPI will be • Percent of Profit Contributed to Community Causes KPI | Rafael Esguevillas Ruiz [http://es.linkedin.com/in/rafaelesguevillas] | 21/06/2012jueves 21 de junio de 2012
  • 10. [Educational Institution] We want to be the most profitable company in our industry • Bad KPI will be • Pre-tax Profit • Shareholder Equity • Good KPI will be • Graduation Rate • Success In Finding Employment After Graduation KPI | Rafael Esguevillas Ruiz [http://es.linkedin.com/in/rafaelesguevillas] | 21/06/2012jueves 21 de junio de 2012
  • 11. Key Performance Indicators Must Be Quantifiablejueves 21 de junio de 2012
  • 12. Define KPI If a Key Performance Indicator is going to be of any value There must be a way to accurately define and measure it. • Generate More Repeat Customers • Need some way to distinguish between new and repeat customers • Be The Most Popular Company • Need a way to measure the companys popularity or compare it to others • An may be it is not easy • Or event impossible • Or too much expensive to get the relevant data KPI | Rafael Esguevillas Ruiz [http://es.linkedin.com/in/rafaelesguevillas] | 21/06/2012jueves 21 de junio de 2012
  • 13. KPI Definition Longlasting Important to define and stay with the same definition from year to year • Increase Sales • We need to define • Measure by units sold or by dollar value of sales? • Will returns be deducted from sales in the month of the sale or the month of the return? • Will sales be recorded for the KPI at list price or at the actual sales price? KPI | Rafael Esguevillas Ruiz [http://es.linkedin.com/in/rafaelesguevillas] | 21/06/2012jueves 21 de junio de 2012
  • 14. Set Targets You need to set the targets for each KPI • A company goal to be the employer of choice might include a KPI of "Turnover Rate" • We can consider the KPI def as the number of voluntary resignations and terminations for performance, divided by the total number of employees at the beginning of the period • A way to measure the KPI it has been set up by collecting the information in an HRIS (Human Resources Information System), for example • Target can be definited as • Reduce turnover by five percent per year • Is a clear target that everyone will understand and be able to take specific action to accomplish KPI | Rafael Esguevillas Ruiz [http://es.linkedin.com/in/rafaelesguevillas] | 21/06/2012jueves 21 de junio de 2012
  • 15. Key Performance Indicators Must be Key To Organisational Successjueves 21 de junio de 2012
  • 16. How Many KPI’s? • Many things are measurable • That does not make them key to the organisations success • It is critical to limit them to those factors that are essential to the organisation reaching its goals • It is also important to keep the number of KPIs small just to keep everyones attention focused on achieving the same of them KPI | Rafael Esguevillas Ruiz [http://es.linkedin.com/in/rafaelesguevillas] | 21/06/2012jueves 21 de junio de 2012
  • 17. KPI will be focused differently in different departments If a company Key Performance Indicator is "Increased Customer Satisfaction" •The Manufacturing Department may have a KPI of "Number of Units Rejected by Quality Inspection" •The Sales Department has a KPI of "Minutes A Customer Is On Hold Before A Sales Rep Answers" KPI | Rafael Esguevillas Ruiz [http://es.linkedin.com/in/rafaelesguevillas] | 21/06/2012jueves 21 de junio de 2012
  • 18. Good Key Performance Indicators vs. Badjueves 21 de junio de 2012
  • 19. Bad Definition? Increase Sales Defined •Change in Sales volume from month to month Measured •Total of Sales By Region for all region Target •Increase each month KPI | Rafael Esguevillas Ruiz [http://es.linkedin.com/in/rafaelesguevillas] | 21/06/2012jueves 21 de junio de 2012
  • 20. Whats missing? • Does this measure increases in sales volume by dollars or units? • If by dollars • Does it measure list price or sales price? • Are returns considered and if so do the appear as an adjustment to the KPI for the month of the sale or are they counted in the month the return happens? • How do we make sure each sales offices volume numbers are counted in one region, i.e. that none are skipped or double counted? • How much, by percentage or dollars or units, do we want to increase sales volumes each month? KPI | Rafael Esguevillas Ruiz [http://es.linkedin.com/in/rafaelesguevillas] | 21/06/2012jueves 21 de junio de 2012
  • 21. Good Definition I? Employee Turnover Defined •The total of the number of employees who resign for whatever reason, plus the number of employees terminated for performance reasons, and that total divided by the number of employees at the beginning of the year •Employees lost due to Reductions in Force (RIF) will not be included in this calculation KPI | Rafael Esguevillas Ruiz [http://es.linkedin.com/in/rafaelesguevillas] | 21/06/2012jueves 21 de junio de 2012
  • 22. Good Definition II? Measured •The HRIS contains records of each employee •The separation section lists reason and date of separation for each employee •Monthly, or when requested by the SVP, the HRIS group will query the database and provide Department Heads with Turnover Reports •HRIS will post graphs of each report on the Intranet Target •Target: Reduce Employee Turnover by 5% per year KPI | Rafael Esguevillas Ruiz [http://es.linkedin.com/in/rafaelesguevillas] | 21/06/2012jueves 21 de junio de 2012
  • 23. Once you have good Key Performance Indicators defined What Do I Do With Key •Ones that reflect your organisations goals •One that you can measure Performance Indicators? •What do you do with them?jueves 21 de junio de 2012
  • 24. use to manage performance You make sure that everything the people in your organisation do is focused on meeting or exceeding those KPIs KPI | Rafael Esguevillas Ruiz [http://es.linkedin.com/in/rafaelesguevillas] | 21/06/2012jueves 21 de junio de 2012
  • 25. use as a carrot • Post the KPIs everywhere: in the lunch room, on the walls of every conference room, on the company intranet, even on the company web site for some of them. • In the lunch room • On the walls of every conference room • On the company intranet • Even on the company web site for some of them¡¡¡¡¡ • Show what the target for each KPI is and show the progress toward that target for each of them • People will be motivated to reach those KPI targets KPI | Rafael Esguevillas Ruiz [http://es.linkedin.com/in/rafaelesguevillas] | 21/06/2012jueves 21 de junio de 2012
  • 26. KPIs give everyone in the organisation a clear picture of what is important, of what they need to make happenjueves 21 de junio de 2012
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    Jul 23, 2017
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