Through some work with thePolice National ITILUser Group, I
have been considering how to differentiatekey performance indicatorsand what
constitutes a KPI. Despite big clues being in those three words,
KPIs are often confused with performance targets and measures. The
two can be very different things.
Quite often an organisation will confuse the two terms. It will
measure (or will start to measure) many, many performance
attributes and call them KPIs, regardless of whether they are key
or not. If you have 100 performance measures, it follows that not
all of them can be key to the business therefore you have to
distinguish between what is a KPI and what is a performance
measure. The number of sales and, therefore, profit will be a KPI
however, the number of servers maintained may not be, but it is
still a useful measure that will contribute towards the KPI (eg,
higher maintenance charges will result in less profit).
The danger is that if KPIs are not meaningful, measurable and
relevant to the business, then, over time, measurement will become
time consuming, will be seen as a waste of time, and will
eventually lapse. An organisation has to see the benefit of
measuring a KPI or performance target.
A KPI has to be key, has to be an indicator, and has to relate
to performance. It does not necessarily have to have a measurement
attached to it, For example a useful KPI could be the number of
complaints received over the year. Whether this number rises or
falls is in itself good indicator of performance and customer
satisfaction, without having the need to attach a target such as a
10% reduction. Therefore, the KPI is "to record the number of
complaints received in each year". The performance measure or
target is a separate value applied to that KPI.
Using the above as an example:
KPI - the number of complaints received in a year
Performance target - a reduction of 10% compared to the previous
year
Performance measure - monthly comparison of complaints towards
the target
In this way, similar organisations can develop common KPIs, but
each organisation can assign their own performance measures and
targets, in terms of frequency and percentages. In police terms,
the common KPI could be to measure the availability of its mission
critical services (eg, command and control or radio services).
However, each force could then assign a different measure. For a
big force this could be 99.9%, for a smaller force it could be
99.0%. The important thing is that availability is being measured,
trends are being established and corrective action is being
taken.
Therefore, to keep things manageable, it is recommended that,
initially, KPIs focus on those elements of performance that are
critical to the success of the organisation, and that these are
kept to the absolute minimum. Performance targets and measures
should be applied to the elements of performance that contribute
towards the KPIs. Again these should be kept to the minimum
required to ensure that they can be, and are, measured
regularly.