Putting KPI Theory Into Practice

There are many possible KPIs for every business objective and management should carefully consider the following:​

• Topics that executives need to discuss, e.g., profitability or productivity.

• KPIs that already exist and those that need to be established.

• Improvement requirements, e.g., better remuneration program.

• Behavioral changes demanded by this objective, e.g., more loyalty among employees.

Filtering and selecting the most appropriate KPIs is the first step. Managers and their support teams should list potential KPIs and then select the most appropriate from this shortlist. A half-day workshop, in which managers and staff collectively decide which KPIs to apply to each objective, can help the selection process. For example, a workshop could produce 50 KPIs that then need to be discussed and filtered down to 15 KPIs before being agreed.

 When thinking through the selection, the following considerations can be helpful: strategic relevance, practicality, frequency, ease of communication and clarity of representation.

 Selecting the right KPIs comes with experience. However, there are many KPI sources for people to use, such as staff workshops, competitors, benchmarking, industry standards, historical information and websites.

 Dr. Rachad Baroudi

CEO, KPI Mega Library