Key Performance Indicators (KPI)

1. Key Performance Indicators (KPI) By: Monica Moawad

2. What are Key Performance Indicators? • Key metrics • Different types of measures • Determined by a business’s goals and objectives • Aid decision-making

3. Why KPIs are Important? • Provide information on the performance of key business activities • Track progress of key business activities

4. Who Uses KPIs? • Usually used by managers of different departments within a business • Employees

5. Types of KPIs • Leading indicators – indicators that measure a business’s possible future events • E.g. Customer satisfaction ratings • Lagging indicators – indicators that measure a business’s past events • E.g. Profitability • Qualitative indicators – indicators that provide observations of specific things • E.g. Customer loyalty • Quantitative indicators – indicators that provide numerical results on specific activities • E.g. % of new employees that stay in a business for a specific time

6. Types of KPIs • Leading indicators – indicators that measure a business’s possible future events • E.g. Customer satisfaction ratings • Lagging indicators – indicators that measure a business’s past events • E.g. Profitability • Qualitative indicators – indicators that provide observations of specific things • E.g. Customer loyalty • Quantitative indicators – indicators that provide numbers on specific activities • E.g. % of new employees that stay in a business for a specific time

7. Steps Managers take when Implementing KPIs • Identify core business activities • Identify key measurements for activities • Develop key measurements for activities • Implement key measurements to analyze activities

8. Steps Managers take when Implementing KPIs • Identify core business activities • Identify key measurements for activities • Develop key measurements for activities • Implement key measurements to analyze activities

9. Steps Managers take when Implementing KPIs • Identify core business activities • Identify key measurements for activities • Develop key measurements for activities • Implement key measurements to analyze activities

10. Steps Managers take when Implementing KPIs • Identify core business activities • Identify key measurements for activities • Develop key measurements for activities • Implement key measurements to analyze activities

11. Steps Managers take when Implementing KPIs • Identify core business activities • Identify key measurements for activities • Develop key measurements for activities • Implement key measurements to analyze activities

12. Examples of KPIs • Productivity • Dollar revenue from new customers • Quality • Percent returns, customer complaints • Profitability • Profit contribution by customer segment

13. Examples KPIs (Cont’d) • Recruitment • Average time to recruit • Employee development • Average training costs per employee • Environmental • Amount of energy saved due to conservation and efficiency improvements

14. Examples of eCommerce KPIs • % online positive comments • i.e. A business that wants to improve its online reputation system • # of followers on social media platforms • E.g. Facebook • % customer transactions via Internet • i.e. A business that wants to eliminate physical stores • % subscription renewal • E.g. Netflix

15. Approaches to Developing KPIs • Balanced scorecard • Create a list of goals

16. How are KPIs Organized and Reported? • KPI dashboard • Excel

17. KPI Challenges • Identifying the right KPIs that help the business achieve its goals and objectives • Gathering the right data for the identified KPIs

18. KPI Advantages • Gives top managers information on the progress of a business over time • Gives managers of different departments information on the progress of their departments over time • Reliable basis for action

19. KPI Disadvantages • Might be misleading if it is not the right KPI for the task • Data overload

20. Interesting Quotes • “Not everything that can be counted counts, and not everything that counts can be counted.”-Albert Einstein • "You get what you measure. Measure the wrong thing and you get the wrong behaviors.”-John H. Lingle

21. Time’s Up! • About your speaker: • Name: Monica Moawad • Email: monica.moawad@utoronto.ca Thank You for Listening

22. References • Images: • http://www.kaizen-analytics.com/2008/11/defining-actionable-business-driven.html • http://www.inetsoft.com/images/screenshots/exec_sales_dashboard.png • http://www.cartoonstock.com/lowres/dcr0293l.jpg • http://www.m-g-e.org/wp-content/uploads/2011/04/Support-not-Reports-A-new-way-to-think-about-Management-Information..jpg • http://www.epmreview.com/Experts-Zone/Cartoon-Corner/KPI-Door.html • http://www.sqaki.com/7/BalancedScorecardKpi/screenshot.gif

23. References (Cont’d) • Information: • http://www.davechaffey.com/Internet-Marketing/C4-Strategy/leading-lagging-performance-indicators-ecommerce/ • http://chiefmarketer.com/crm_loop/performance-indicators-062806/ • http://www.ap-institute.com/Key%20Performance%20Indicators.html • http://smallbusiness.chron.com/planning-kpi-4607.html • http://www.simplybusiness.co.uk/knowledge/articles/2010/07/2010-07-26-key-performance-indicators-measuring-the-success-of-your-business/ • http://www.clickz.com/clickz/column/2074940/quotes-analytics-success • http://corpslakes.usace.army.mil/employees/perform/quotes.cfm • http://www.balancedscorecard.org/BSCResources/AbouttheBalancedScorecard/tabid/55/Default.aspx • http://www.information-management.com/issues/20041001/1011028-1.html • http://rapidbi.com/created/samplekeyperformanceindicatorskpi/ • http://www.smartkpis.com/kpi/functional-areas/online-presence-ecommerce/