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How to choose key performance indicators KPIs

19 May 2022   By   Share

5 recommendations to choose the right key performance indicator (KPI)

Knowing the direction of the wind doesn't matter if I don't know which port I am going to. A good key performance indicator is precise, never silent, simple, a risk reducer, always leads to a decision and belongs to users.

A Key performance indicator is precise

A key performance indicator (KPI) is necessarily combined with a precise goal.
It is really not necessary to have at our disposal key performance indicators without direct relation with local and personal orientations.
A key performance indicator must be in close connexion with the specially selected directions to channel actions at their best.

2. A key performance indicator always leads to a decision

It is not possible to have, in a cooperative performance dashboard, key performance indicators which may be important at company level but ineffective at local level. If the decision-maker or team don't have any mean of action at their disposal, or if they don't feel concerned about the indicator, it better not to place it in the cooperative performance dashboard. That can only overload it.

3. A key performance indicator is never silent

The reason why I do nothing is not because I don't know what to do, but it is because there is nothing to do...
So, a key performance indicator has always an effect. But it may indicate as well that everything is under control and that the success is at the end of the road. No supplementary action will be taken and the decision will be to change nothing.

About client satisfaction measurement indicators
Key performance indicators which are supposed to measure client satisfaction are appearing on dashboards. If client orientation is an everyday concern, we have to admit that this so-called indicator only fulfills a symbolic purpose that conveys above all a clear conscience.

These kinds of indicators are too general and calculated, we don't know how. They can't lead to an effective decision-making among actors who don't know which lever to use to be able to go in the direction of improvement.

4. The precision of the key performance indicator is quite relative

Rapidity is essential to success. It's sometimes not possible to wait for comprehensive and exhaustive results to decide with full knowledge of the facts. A minimum of risks has to be taken, being content with a partial result. But intuition informs us that the risk will be minor. Performance dashboard must remain a risk reducer...

5. A key performance indicator belongs to the one who is using it.

In order that the performance dashboard fulfills quite well its role of risk reducer, it is important that the decision maker or decision group has faith in presented indicators for it's above all by exploiting one's intuition that the best decisions are made. Key performance indicators will be chosen by the users.

We will not hesitate in avoiding generic and predefined key performance indicators. They are useless for decision making. A key performance indicator can't be pulled out of a hat.

All these points are completed, developed and illustrated in the reference book Les nouveaux tableaux de bord des managers. This book presents a comprehensive methodology, a road map in 10 stages, to select pertinent key performance indicators and build genuine cooperative performance dashboards.


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