1. Implementing KPIs in smaller organisations (under 200 staff) Presented by David Parmenter waymark solutions limited December 2007 Website: www.waymark.co.nz Email: parmenter@waymark.co.nzparmenter@waymark.co.nz Blog: www.davidparmenter.com

2. How many KPIs are there in your organisation?  less than 20  between 20-50  between 51-100  over 100

3. What is the most common timeframe KPIs are reported within?  24/7  daily  weekly  monthly  quarterly

4. Learning outcomes  understand that this workshop needs to be reviewed with “Implementing Winning KPIs”  gain an understanding of how to implement winning key performance indicators (KPIs) in a smaller organisation  understand the eight phase implementation process for smaller organisations

5. The eight phase approach

6. Phase :1 Selling the change  engage in-house or external PR expert to sell by the emotional drivers!!  send my winning KPIs article to the SMT  log into www.bettermanagement.com and set up an accountwww.bettermanagement.com  introduce them to the concept by playing the web cast on www.bettermanagement.comwww.bettermanagement.com  market the focus group workshop concept  emphasis on a bottom-up process

7. Sell KPI project on emotional drivers  there are too many measures that have not changed anything and cost a lot  the CEO and SMT would be more effective in less time  the right KPIs will link daily staff activities to the strategic objectives  reporting on a 24/7, daily, and weekly timeframe instead of the “too late” monthly update

8. Phase 2: The focus group workshop  cross section of 15 to 30 experienced staff  the morning session should be attended by the entire executive team  all candidates for the KPI project team to attend  outline the four foundation stones

9. The workshop agenda  understanding of the issues  ascertain the CSFs of the organisation (pre- work already done)  refining the CSFs  use a relationship mapping process to find the top 5 to 8 CSFs  focus group feedback on viability and implementation program

10. Exhibit 4: The four types of performance measures 80 PIs & RIs 10 KRIs 10 KPIs

11. The characteristics of KPIs  non financial measures (not Pds, $s etc)  measured frequently e.g. daily or 24 by 7  acted upon by CEO and the SMT  all staff understand the measure and what corrective action is required  responsibility can be tied down to the individual or team  significant impact e.g. it impacts most of the: top eight CSFs and BSC perspectives  has a positive impact e.g. affects all other performance measures in a positive way

12. Linking the workface to the strategic objectives

13. Linkage of strategy to KPIs and BSC Linkage of strategy to measurement Learning & Growth Customer satisfaction Financial Results Internal Processes Strategies (issues & Initiatives) Mission / Vision / Values Critical Success Factors Key Result Indicators (max 10) Performance Indicators & Result Indicators (80 or so) Key Performance Indicators (max 10) Staff satisfaction Community & environment Learning & Growth Customer satisfaction Financial Results Internal Processes Staff satisfaction Community & environment KPIs & PIs in a balanced scorecard and KRIs in a dashboard

14. Importance of getting the CSFs wording right  wording of the CSFs is critical retention of staff becomes retention of key staff increase repeat business becomes increase repeat business from core customers  measures become more specific daily sales becomes daily sales made to key customers planned calls becomes planned calls to key customers deliveries made on time becomes deliveries to key customers made on time

15. Explain the four foundation stones PIs and RIs (80)

16. Short listing the CSFs – by relationship mapping Increased recognition Increase repeat business Retention of key staff 4 OUT

17. Ask the focus group in the afternoon  can we complete this project with other competing activities?  will it fit with the existing measurement culture?  what should we learn from other implementations?  what implementation steps should we change?  is the project red, amber, green?

18. Phase 3: KPI project team trained and empowered  2 to 4 in-house well-trained staff with: excellent presentation and communication skills a flair for innovation ability to complete knowledge of both the organisation and sector  report directly to the CEO  empowered to make decisions

19. Training the KPI team  a comprehensive understanding of the KPI book  how to facilitate workshops which they will be running  how to deliver informative presentations  how to design report formats  better practice communication techniques  using systems to maintain a vibrant project team home page

20. KPI team structure

21. Empower a "just do it" culture and process it is a sculpture “right first time” is a rare achievement use Kaplan and Norton’s book “Translating strategy into action the balanced scorecard” and my KPI book belief that we can do it, and do not need to rely on experts to run the project there is no need to heavily invest in BSC applications

22. Phase 4: Involving all the employees  run a survey on a cross section of staff e.g. about 50 staff out of the 200  organise a series of full day workshops  SMT sell the change to staff in first session teams to brainstorm performance measures (PMs) in all 6 perspectives 25 PMs for a team (mix of past, current and forward looking measures)  record the measures during the workshop

23. Selling the change to staff  the right mix of performance measures will make work more rewarding and enjoyable  the focus on the right measures would mean their work would be more effective  staff will be making more decisions  winning KPIs will enhance profitability and thus offer greater job security and remuneration

24. Staff to record the measures in a database at the workshop  this needs to be set up early on  all performance measures identified need to be collated in a database (edit later)  use a common company wide database  make database available to teams to help with selection  train staff to use the database

25. Workshops held to brainstorm the PMs for the top 5 to 8 CSFs

26. Performance indicator database

27. Promote Pareto's 80:20  only worth measuring metrically where it is a KPI which is fundamental to the organisations well-being (e.g. late planes)  when not to dive into metrics measuring project progress (story) measuring time (only lawyers need 6 minute units) measuring processing volumes- use a sample week in the month  estimates are fine for many measures

28. Phase 5: Selecting organisational "winning KPIs"  KPI team will have learnt from facilitating the teams  avoid consolidation of measures upwards  all potential KPIs to pass through the KPI 7 point test (see slide)  once levels 1 and 4 are semi-finalised back-fill levels 2 &3  limit the organisation-wide KPIs to no more than 10

29. Bottom-up starting point is best

30. Phase 6: developing the reporting framework at all levels  most KPIs should be reported each day, some 24 by 7  segregate KRIs from PIs, RIs and KPIs  the Board should only receive the KRIs e.g. in a governance “dashboard”  reporting through the intranet / Executive Information System  avoid specialised BSC reporting system for 12 months  empower KPI team to design report formats

31. Phase 6: developing the reporting framework at all levels  review Stephen Few’s work see www.perceptualedge.com/articles/Whitepapers/C ommon_Pitfalls.pdf  establish meaningful graphs that are easy to understand  regularly review of the graphs by teams, departments and divisions

32. Phase 7: Facilitating the use of winning KPIs  use of KPIs must be wide spread in the organisation  SMT and particularly the CEO needs to act daily on the embryo KPIs  the SMT needs to empower staff to take immediate action  empowerment will take time to be taken on by staff  remember the 10,80,10 rule

33. Phase 8: Refining KPIs in 12 months to maintain their relevance  review organisation-wide CSFs  team workshops to modify their KPIs and PIs (experience, conditions, new processes etc.)  some KPIs will always be maintained  sustain the stakeholder consultation

34. These books came out in 07 www.waymark.co.nz to order, see link to www.amazon.comwww.amazon.com

35. Thank you for attending look forward to hearing about your progress Thank you for attending look forward to hearing about your progress

36. Amazon link on www.davidparmenter.com John Wiley & Sons have published