Step 1: Decide what to measure
The first hurdle a company must face is to decide exactly what to measure. There are many KPIs available and so you must be guided by your own company goals and project goals – your critical success factors – to ensure that the right KPIs are chosen in the first place.
Examples of Critical Success Factors:
- For companies facing a recruitment crisis, for example, a critical success factor could be staff retention;
- On some projects a client can afford to go over-budget; the critical success factor here could be value for money.
- At other times, it could be critical that the project is on-cost: the client may have budget constraints or the nature of the contract may mean that no extra money is available for the project
Choosing Key Performance Indicators:
- If staff retention is critical to the business, measure and monitor Employee Satisfaction!
- If the client demands VFM, measure Client Satisfaction!
- If a project must be delivered on cost, monitor Cost Predictability!
Other rules of thumb:
- Select a suite of 8 to12 KPIs - any more than that and data collection and processing can be arduous and taking action, following benchmarking, can be a mammoth exercise.
- Do not duplicate information flows that are already established and functioning well.
- If you have not tried performance measurement before, select a mixture of company and project KPIs covering the three aspects of sustainability – economic success, social improvement and environmental performance. That is, unless you have a very high priority area that means you need to specialise in a particular area of performance measurement (e.g. environmental performance)
Peter Schofield, Programme Manager, North East Improvement and Efficiency Partnership, “In my experience, picking KPIs is really difficult. And it is even worse if you’ve got a number of organisations round a table trying to agree a common set of measures. Because we’re working in the public sector, our KPIs need to reflect government priorities – in our case, sustainability and efficiency.”