Publicaties

Building an excellent KPI structure is critical for implementing a good Performance Management framework for your company. It is the foundation for communicating and improving performance, day in day out. But how do you build a KPI structure that lasts? Rule 5 out of 10: define your productivity objectives and KPIs.

 

Let’s now focus on the other pillar: productivity. Defining your productivity objectives, to drive your ultimate goal, consists normally of two elements. The first element is related to the type of business your in. The other has to do with current problems or pain in the execution.

 

Type of business determines type of KPIs. For instance, when you have heavily invested in assets, like an aeroplane company, who will need KPI’s that measure asset utilization. Examples could be ‘’% of occupied seat per flight’’. This is of course, totally different for a consultant company. Their type of business is not fixed assets driven, but is a people business. They have to look at other KPIs, for instance the billing rate or level direct / indirect employees. So type of business drives you to the right KPIs to measure productivity or efficiency within your business. The KPI’s you select based on type will not change a lot as long as your type of business doesn’t change.

 

The second element that leads to additional KPIs is related to current issues. Where are costs out of control and which KPIs create the right focus on these costs. For instance, logistics costs are high you might look at distribution costs per unit or % logistic cost of sales. In time, the KPIs you select other KPIs since problems move from one area to another.