Why have key performance indicators?
There needs to be a two-way feedback process between the frontline of the business and the decision-making/management area. It is important to know what is happening and why, and if something can be improved, people need to know what to do about it. Even more importantly, good KPIs will motivate people in the frontline because they can see, from the figures, the effect they are having on performance, thereby feeling some sense of achievement in their work. The three functions of KPIs are: • To show results across the business • To provide knowledge of how to improve processes • To motivate and involve people – therefore to make things happen These three functions give us a set of rules for implementation. The KPIs must show the results of the process, and indeed of the business. These are known as ‘high level’ KPIs, which tell us whether we have won or lost. However, they may not tell us much about why, and for that we need to have ‘knowledge-bearing’ KPIs, which show waste errors and
