The Measurement step in my model represents how progress toward achieving the Vision could be measured. All organizations have things that they measure. However, are you measuring and monitoring the most important ones? Many organizations are trying to monitor too many numbers. I believe it is best for an organization to identify and monitor the 4-6 most critical indicators and these need to cover all important areas. I will refer to these critical few as KPIs (Key Performance Indicators). A KPI is something you can measure, plot on a graph, establish goals both short and long range. The following areas should be considered when selecting KPIs. Examples are identified of what the KPIs could be to assist with understanding. It is important to select the critical areas first and then decide what is best to measure.
Finances:
ROI, RONA, gross margin, net margins, inventories
Customers:
Complaints, repeat business, revenue
Employees:
Turnover, training hours
Processes:
Turnaround time, order processing time, set up times
Quality:
Returns, reject rates
Safety:
Serious injury frequency
Environmental:
Violations, emissions
Markets:
% market share
Other:
?
The KPIs I have been referring to are for the overall organization. Department or divisions in larger businesses can have their own KPIs which in some cases are the same as the overall and in some cases are unique to that group but support the overall.
Narrowing the list of possibilities to the critical 4-6 is not an easy task but I feel that the value is worth the effort.
A Sample KPI Graph for an example of a graph template in Excel format that can be used.
Are you satisfied that the “critical few” things that your organization measures and monitors are appropriate?
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