Key Performance Indicators (KPIs) Essay

Key Performance Indicators (KPIs) ar quantitative and qualitative measures substance abused to review an organizations approach against its goals. These argon broken down and set as targets for achievement by departments and individuals. The achievement of these targets is reviewed at level(p) intervals. KPIs are used to monitor the surgical operation of a compevery, department, process or even an individual machine. They leave behind as well as help shape the behaviors of employees within the company. KPIs pick up to be flexible and theorise the changing goals of the organization. Goals change as the organization changes in re roundion to outside factors or as it gets closer to achieving its original goals. Individual KPIs inquire to be directly linked to organization goals and objectives, or overall organization KPIs where they are used.They motive to reflect organization culture and values, by indicating the references of behavior and feat the organization will reco gnize as successful and reward employees for. KPIs need to be measurable and reflect a balance between in operation(p) and people orientated measures. KPIs are a fundamental component of sustaining a change process and maintaining a surgical operation management culture. KPIs should be reorient with the organizations vision and direction. When performance is measured, and the chairs are made visible, organizations give take action to improve. SMART KPIsThe acronym SMART is often used to account KPIs.SpecificMeasurableAchievableRelevant sentencelySpecificKPIs need to be special to the individual job and if mathematical expressed as statements of actual on-the-job behaviors. For practice, a KPI shouldExplain clearly to the employee what he/she has to do in terms of performance to be successful Have an fix on successful job performance, that is distinguishing between effective performance and inefficacious performanceFocus on the behavior itself, rather than personality att ri only ifes often(prenominal) as attitude to customers. Terms such as work quality, and job knowledge are too vague to be of much use. MeasurableKPIs must be measurable, that is based on behavior that tolerate be observed and documented, and which is job-related. They should also provide employees with ongoing feedback on their well-worn of performance. AchievablePerformance management needs to be an open, collaborative converse process. KPIs must be seen by all that they are achievable. The KPI must be realistically achievable. If it is set too high for the circumstances (such as an intriguing production target), not only will it be irrelevant but it will ensure failure. RelevantIt is essential that employees clearly understand the KPIs, and that they waste the same meaning to both parties. Consultation is more likely to result in standards that are relevant and valid. TimelyKPIs should have an appropriate clipping frame.It should be possible to collect the relevant infor mation either as it happens or within a short quantify afterwards, otherwise it will lose its relevance. As outputs of the performance management system, KPIs also need to be in alignment with other HR-related functions, including training and development, recruitment and selection, rewards and lore, and career planning. duty aspects that require KPIsKPIs should cover e rattling aspect of the business. Sample examples are node satisfactionEmployee satisfactionStaff turnoverAbsenteeismDepartment/division specific measuresTriple bottom line financial, environmental and social responsibility pay including revenue and beOHS reporting including incidents and related beEquipment usage and OEE criminal maintenance costs and effectivenessNew product development & innovation snuff it times and down times pure toneKPI componentsKPIs should identify the required outcomes, for exampleThe minimum acceptable performance e.g. daily break even smirch Target performance eg desired daily outp ut.KPIs shouldBe communicated to all mental faculty so that they are aware of how they are to be measured and how their KPIs daze on the organization as a whole Be align with the vision and direction of the organization Have relevant reward and recognition criteria linked to severally KPI. When implementing new KPIs, having baseline data to measure processions is very important. Progress on KPIs should be communicated at regular times to highlighting emerging trends. As these trends emerge, assortive action domiciliate be enforced in a timely fashion. KPIs need to be communicated via multiple media. The measures that are selected must be carefully specified to ensure they do not cause non-lean behaviors. In many cases there will need to be a selection of measures that balance quality and quantity factors to ensure the correct behaviors are encouraged. Listed below are some examples of the behaviors and outcomes that measure in isolation can cause.Measure in isolation Behavi or Outcome drudgery output Make more OverproductionMachine efficiency track down machine longerRun in most efficient place for machine Unnecessary stock Customer orders lateMaintenance costs Reduction in maintenance activities to reduce costs Machine breakdowns bills flow performance Pay suppliers as late as possible Supplier deliveries XX unreliable Creating KPIsKPIs must be designed for each proposed change to the production process so that There is a base line criterion taken to establish a starting performance standard There are measures developed to track the police squadsperformance There are measures established that can highlight any variability. This can assist in future diagnoses Reward and recognition can be effectively implemented.Before data is collected three questions need to be asked.What is the purpose of collecting this data?Will this data declare us what we want to know?Will we be able to act on the data we collect?The goal is to create an easy-to-use, accur ate measurement system with as few measures as possible. The following questions need to be answered when setting up a data collection system What type of metric is it (financial, behavioral or core-process)? Why was it selected?Where will the data be collected?How will it be collected?How often will it be collected?How often and where will the metric be displayed?Who will use it?KPI examplesSome examples of measures that can be used to monitor the performance of a competitive manufacturing company are listed below. Financial ExamplesCosts Material costsLabor costsOperations costsInventoryOvertime endorsement costsCost of SalesInterest on overdraft moment of projects finish on time and on budgetRevenue Sales bring in marginsReturn on assets or investmentProduct profitability group poetic rhythm OvertimeMaterial costsRevenue generated by police squadInventory value in teams area cast of projects completed on time and on budgetCore metrics ExamplesOHS Lost time injuriesNumber of st aff off work length of time staff are off workDIFOT Delivery in full on timeQuality First time through qualityYieldLead-time Order to cash in bank au naturel(p) material to dispatchDock to dockInventory Inventory turnover rateOEE Overall equipment effectivenessSchedule performance % Changes to the weekly docketValue added ratio Ratio of value adding time to lead timeTeam metrics Turnaround time for jobsOutput ratesQuality ratesEquipment OEEAttendance ratesSchedule complianceCustomer feedbackNumber of deadlines/milestones metMetrics relating to specific team tasksBehavioral metrics ExamplesEmployee satisfaction Gained from regular Employee Satisfaction Surveys Staff turnover ratesParticipation levels in improvement activitiesCustomer satisfaction Gained from regular Employee Satisfaction Surveys Retention rates skill uptake Skill matricesAbsenteeism AbsenteeismError rates Error ratesTime spent on managing under-performing staffTeam metrics Number of team meetingsMembers at team mee tingsNumber of ideas generatedNumber of ideas implementedTotal savings generated