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Key Performance Indicators: Developing, Implementing, and Using Winning KPIs by David Parmenter

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Chapter 3. Developing and Using KPIs: A 12-Step Model

This 12-step model (see Exhibit 3.1) is based on the four foundation stones (see Exhibit 3.2 and as outlined earlier in Chapter 2), the findings from organizations that participated in the original study,[1] and a ten-year journey of mine.

12-Step Implementation Time Line

Figure 3.1. 12-Step Implementation Time Line

Four Foundations for KPI Development

Figure 3.2. Four Foundations for KPI Development

Many organizations that have operated with key performance indicators (KPIs) have found the KPIs made little or no difference to performance. In many cases, this was due to a fundamental misunderstanding of the issues. Organizations often begin to develop a KPI system by immediately trying to select KPIs without the preparation that is indicated in the twelve-step implementation plan. Like painting the outside of a house, 70% of a good job is in the preparation. Establishing a sound environment in which KPIs can operate and develop is crucial. Once the organization understands the process involved and appreciates the purpose of introducing KPIs, the building phase can begin.

Step 1: Senior Management Team Commitment

Purpose

The SMT must be committed to developing and driving through the organization KPIs and any balanced scorecard (BSC) that includes them. SMT commitment creates a dynamic environment in which ...

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