KPI selection by SMEs is often sub-optimal for business excellence. However, if your business has an agreed 1-page Strategic Plan (to CHANGE the business) plus an agreed 1-page Process Model (to RUN the business), selecting the right KPIs is simple. Everything your business does must fall into one of these two categories. Here we explain how to select the right overall set of KPIs for monitoring your business performance each month, while minimising the administrative effort involved in tracking and reporting.
KPI selection for CHANGING the business via your Strategic Objectives
Your 1-page Strategic Plan will have 7 or less Strategic Objectives for it to be memorable by your employees for day-to-day decision making. In selecting a KPI for each Strategic Objective, all you need to do is answer the following question: “What MUST we measure to convince ourselves that this particular Objective is progressively being implemented over our 3-year planning period?” Best practice is have only 1 KPI per Objective. However, you may add a second or third if you believe they are essential to answer the above question.
KPI selection for RUNNING the business via your Key Processes
Your 1-page Process Model will be comprised of your Key Business (value adding) Processes for your external customers, plus your Key Support Processes for your internal customers (i.e. your own employees). In selecting a KPI for each of these Key Processes, all you need to do is answer the following question: “What MUST we measure to convince ourselves that this particular process is trending healthy this year?” Again, best practice is to have only 1 KPI per Key Process. A second or third may be added if you believe they are essential to answer the above question.
By following these principles, you will end up with the minimum number of the right KPIs to monitor your business every month. That is why this approach is incorporated fully in the My Business Excellence website and associated subscription Portal for implementation.
Click here for a useful third party checklist of other desirable KPI characteristics. The ultimate step of course is to have all the KPIs graphically presented each month in the form of a visual ‘dashboard’ for review by your Management Team.