Key Performance Indicators For Dummies

Key Performance Indicators For Dummies

by Bernard Marr
Released March 2015
Publisher(s): For Dummies
ISBN: 9781118913239

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Book description

A complete guide to using KPIs to drive organisational performance

Is your business on track to achieve success? Key Performance Indicators For Dummies covers the essential KPIs that are useful to all kinds of businesses, and includes more than 100 different ways leaders can monitor and drive performance in their organisations.

This book helps managers understand the crucial KPIs that should be implemented for all different aspects of the organisation, including financial performance, operational and internal processes, sales and marketing, customer satisfaction and more. Good KPIs should be unique to every business, as every business has different objectives. To meet this need, the book provides tools and templates that leaders can use to develop unique KPIs that best suit their particular organisation or industry.

  • Learn to design KPIs that are unique to your business and fit closely to your strategic objectives
  • Determine which KPI questions you should be asking to achieve the right insights for your business
  • Learn the specific KPIs that are appropriate for different business circumstances
  • Turn KPIs into deep insights by mastering related reporting and communications practices

KPIs are a crucial part of every manager's toolkit, and are essential for helping to monitor the execution of business strategies and measure results. Key Performance Indicators For Dummies moves beyond a basic discussion of what KPIs are, and why they are needed to provide a complete guide for learning to design and use specific KPIs to drive organisational performance.

Table of contents

    1. Introduction
      1. About This Book
      2. Foolish Assumptions
      3. Icons Used in This Book
      4. Beyond the Book
      5. Where to Go from Here
    2. Part I: Getting Started with Key Performance Indicators
      1. Chapter 1: Introducing Key Performance Indicators (KPIs)
        1. Why Every Company Needs KPIs
          1. The Fishing Analogy
          2. The Datafication of our World
          3. KPIs as vital decision support tools
        2. Making KPIs Work in Your Business
          1. Create a KPI culture
          2. Decide on the right KPI framework
          3. Develop the right KPIs
          4. Analyse and report
        3. Assessing Your Financial KPIs
          1. Revenue and profit
          2. Liquidity and cash flow
          3. Shareholder value
          4. Financial efficiency
        4. Assessing Your Customer KPIs
          1. Customer satisfaction and loyalty
          2. Market share
        5. Assessing Your Operational KPIs
          1. Project performance
          2. Efficiency and quality
          3. IT
        6. Assessing Your Employee KPIs
          1. Employee engagement
          2. Talent retention
      2. Chapter 2: Types, Targets and KPI Mistakes
        1. Understanding that KPIs can be Strategic or Operational
          1. The pear tree analogy
          2. Why we can measure everything and how to do it
        2. Creating the Right Set of KPIs
          1. What is a good number of KPIs?
          2. Tracking the tangible and intangible
          3. The leaders and the laggers
        3. Setting the Right Targets for Your KPIs
          1. KPIs vs. targets
          2. Making targets specific
          3. Making targets realistic and achievable
        4. Knowing Where People Go Wrong with KPIs
          1. Measuring everything that walks and moves
          2. Collecting the same measures as everyone else
          3. Not choosing the relevant KPIs
      3. Chapter 3: Creating a Culture of Fact-Based Decision-Making
        1. Implementing the Key Components of Fact-Based Management
          1. Establishing senior management buy-in
          2. Introducing KPIs for the right reasons
          3. Establishing the processes and culture
        2. Creating Improvement and Performance Preview Meetings
          1. Introducing strategy revision meetings
          2. Establishing strategic performance preview meetings
          3. Putting in place operational performance improvement meetings
          4. Aligning personal performance discussions
      4. Chapter 4: Organising Your KPIs
        1. Understanding the Need for KPI Frameworks
          1. Weighing the options
          2. Selecting the right framework
        2. Introducing the Balanced Scorecard
          1. Getting a grasp of the four BSC perspectives
          2. Tackling the financial perspective
          3. Making sure you’re delivering to your customers
          4. Looking at your internal processes
          5. Improving and driving future value
          6. Putting it on paper and mapping it out
        3. Looking at Alternative KPI Frameworks
          1. Using Quality or Lean Frameworks
          2. Using Project Management Frameworks
          3. The Risky Side of Business
    3. Part II: Implementing and Using KPIs Effectively
      1. Chapter 5: Developing a KPI
        1. The Question is The Answer: Developing Key Performance Questions (KPQs)
          1. Harnessing the power of questions
          2. Creating good key performance questions (KPQs)
        2. Deciding on the Right KPIs
          1. Step 1: Linking KPIs to strategic objectives
          2. Step 2: Identifying the unanswered questions
          3. Step 3: Isolating the decisions to take
          4. Step 4: Checking for existing data and methods
          5. Step 5: Collecting meaningful data in time
          6. Step 6: Assessing the usefulness to answering the question
          7. Step 7: Assessing the usefulness to decision-making
          8. Step 8: Creating awareness of cheating
          9. Step 9: Are the costs and effort justified?
          10. Step 10: Collecting the data
          11. Making it work: the ten-step template in action
        3. Deciding on How to Collect the Data
          1. Identifying types of data
          2. Applying quantitative methods
          3. Understanding qualitative methods
          4. Combining data to improve insights
          5. The big data challenge
        4. Finalising Your KPIs: Applying the KPI Design Template
          1. The basics
          2. Completing your KPI Template
          3. How good is the indicator?
      2. Chapter 6: Use it or Lose it: Turning KPIs into Insights
        1. Testing Cause and Effect Relationships
          1. Why strategies are just assumptions
          2. Testing your assumptions
          3. Testing Business Assumptions at Google, Inc.
        2. Learning from Business Experiments
        3. Removing Bias through Business Experiments
        4. Business Intelligence and Analytics
          1. Datafication
          2. Analytics
      3. Chapter 7: Spreading the Word: Reporting and Communicating KPIs Effectively
        1. Getting the Attention of the Decision Maker
          1. The importance of communicating
          2. Keeping in mind the target audience
          3. Using best practice performance reports
          4. Publishing analogy
          5. Headline, photo and narrative
        2. Visualising KPIs: Using Graphs and Charts
          1. Bar graph
          2. Line graph
          3. Pie chart
          4. Scatter chart
          5. Bullet graph
          6. Speedometer dials or gauges
          7. Using innovative ways to visualise data
        3. Developing Management Dashboards
          1. Seven dashboard design tips
          2. Making use of software tools
    4. Part III: Developing Financial KPIs
      1. Chapter 8: The Holy Grail of Business: Revenue and Profit KPIs
        1. The Bottom Line – Gauging Profit
          1. Profit means prizes
          2. Understanding the different perspectives on profit
          3. Why profit only matters in context
          4. Measuring profit in practice
        2. Measuring Profit Margins
          1. Why margins are so vital
          2. Knowing the different profit margins
          3. Measuring profit margins in practice
        3. The Top-Line: Measuring Revenue Growth
          1. When revenue isn’t everything
          2. Why you should track revenue over time
          3. Measuring revenue in practice
      2. Chapter 9: The Ones You Can’t Take Your Eyes Off: Liquidity and Cash Flow KPIs
        1. Tracking Your Cash
          1. Why cash is king
          2. What cash flow tells you about your business
          3. Measuring cash flow in practice
        2. Looking Out for Liquidity
          1. The often unseen danger
          2. Measuring liquidity in practice
      3. Chapter 10: Reporting to the Masters: Shareholder and Value-Added KPIs
        1. The Ultimate Value Metric: EVA
          1. Why profitable companies might not create value
          2. Understanding opportunity cost
          3. Measuring opportunity cost in practice
        2. Keeping an Eye on Your Share Price
          1. It’s all relative: comparing businesses
          2. Measuring P/E ratio in practice
        3. Tracking Total Shareholder Return (TSR)
          1. Competition is stiff on the stock market
          2. Measuring TSR in practice
      4. Chapter 11: Measuring Your Financial Efficiency
        1. Assessing the Return on Investment
          1. Every investment must yield a return
          2. Measuring ROI in practice
        2. Measuring the Return on Capital Employed
          1. Understanding ROCE
          2. Measuring ROCE in practice
        3. Gauging Return on Equity (ROE)
          1. Why should you measure ROE
          2. Measuring ROE in practice
        4. Understanding Return on Assets (ROA)
          1. Why does ROA matter to companies?
          2. Measuring ROA in practice
    5. Part IV: Developing Customer, Sales and Marketing KPIs
      1. Chapter 12: The Customer is Always Right: Measuring Your Customer Success
        1. Asking if Your Customers Would Recommend You (NPS)
          1. How NPS drives loyalty and profitability
          2. Understanding the NPS formula
          3. Measuring NPS in practice
        2. Measuring How Satisfied Your Customers Are (Satisfaction Index)
          1. Identifying what makes your customers happy
          2. Creating your unique index
          3. Measuring CSI in practice
        3. Tracking How Likely Your Customers are To Leave (Retention/Churn)
          1. Churn and retention matters!
          2. Measuring it in practice
        4. Gauging Whether All Customers are Equal (Profitability)
          1. Understanding where the profits are made
          2. Tracking customer profitability
          3. Measuring it in practice
        5. Calculating Your Customers’ Value (Life-Time Value)
          1. The ultimate customer KPI!
          2. Measuring it in practice
        6. Measuring Whether Your Customers are Truly Engaged
          1. Understanding the different levels of engagement
          2. Measuring engagement in practice
      2. Chapter 13: Measuring the Market and Your Place in It
        1. Painting a Picture of Your Market (Market Growth Rate)
          1. Understanding the health of your market
          2. Options for measuring market growth rate
          3. Measuring market growth rate in practice
        2. Understanding Your Place in the Market (Market Share)
          1. Why market share matters
          2. Getting a good picture of your market can be tough
          3. Measuring relative market share in practice
        3. Gauging Your Market Success (Customer Acquisition KPIs)
          1. Knowing the cost of finding new customers
          2. Options for gauging customer conversion
          3. Measuring cost per lead in practice
        4. Charting the Power of Your Brand
          1. What brand equity means for your business
          2. Finding your unique formula
          3. Measuring brand equity in practice
    6. Part V: Developing Operational and Internal Process KPIs
      1. Chapter 14: Measuring Project Performance
        1. Why Project Performance Matters
        2. Introducing the Three Components of Project Performance
          1. Tracking whether your projects are on time (Project Schedule Variance)
          2. Measuring whether your projects are on budget (Project Cost Variance)
          3. Checking whether your projects are delivering the right value (Earned Value)
          4. Measuring the KPIs in practice
      2. Chapter 15: Measuring Internal Efficiency and Quality
        1. Assessing Quality, Lean and Six Sigma KPIs
          1. Why Lean matters
          2. What does Six Sigma really mean?
          3. Finding your ways to track quality
          4. Measuring the KPIs in practice
        2. Calculating Your Internal Productivity
          1. Looking at waste levels
          2. Monitoring rework levels
          3. Scrutinizing order fulfilment
          4. Dissecting delivery
          5. Investigating inventory
        3. Asking Yourself Whether You’re Future Proof
          1. Your innovation pipeline
      3. Chapter 16: Measuring IT Performance
        1. Why IT Matters More Than Ever
          1. Measuring IT service delivery
          2. Measuring IT project performance
    7. Part VI: Measuring Your Most Important Assets: Developing HR and People KPIs
      1. Chapter 17: Measuring People Performance
        1. How Satisfied and Engaged are Your People?
          1. Satisfaction and engagement matters
          2. Measuring satisfaction and engagement in practice
        2. Would your Employees Recommend Your Business?
          1. Measuring the trends
          2. Measuring staff advocacy in practice
        3. Looking All Around – 360 Degree Feedback
          1. Understanding the need for a full picture
          2. Measuring 360-degree feedback in practice
        4. How Much Value Are Employees Generating?
          1. Measuring the value your employees generate in practice
      2. Chapter 18: Measuring Human Resources Performance
        1. Charting How Well You’re Recruiting
          1. Finding and keeping talent
          2. Moving beyond the trivial
          3. Measuring recruitment effectiveness in practice
        2. Analysing How Well You’re Training
          1. The pitfalls and challenges of measuring training
          2. Measuring it in practice
    8. Part VII: The Part of Tens
      1. Chapter 19: Ten Tips for Developing Effective KPIs
        1. Map Your Strategy
        2. Identify the Questions You Need to Answer
        3. Define Your Data Needs
        4. Evaluate All Existing Data
        5. Find the Right Measurement Methodology
        6. Assign Ownership
        7. Identify the Right Measurement Frequency
        8. Ensure Costs and Efforts are Justified
        9. Find the Right Supporting Data
        10. Finding the Right Picture to Communicate your KPI
      2. Chapter 20: The Ten Biggest KPI Mistakes to Avoid
        1. Measure Everything That is Easy to Measure
        2. Measure Everything Everyone Else is Measuring
        3. Not Linking KPIs to Strategy
        4. Not Separating Strategic KPIs from Other Data
        5. Hardwiring KPIs to Incentives
        6. Not Involving Executives in the KPI Selection
        7. Not Analysing Your KPIs to Extract Insights
        8. Not Challenging Your KPIs
        9. Not Updating Your KPIs
        10. Not Acting on Your KPIs
      3. Chapter 21: The Top Ten KPIs to Use
        1. Revenue Growth Rate
        2. Net Profit Margin
        3. Cash Conversion Cycle (CCC)
        4. Net Promoter Score
        5. Customer Engagement
        6. Customer Profitability
        7. Relative Market Share
        8. Capacity Utilisation Rate (CUR)
        9. Staff Advocacy Score
        10. Sustainability Index
    9. About the Author
    10. Cheat Sheet
    11. More Dummies Products

Product information

  • Title: Key Performance Indicators For Dummies
  • Author(s): Bernard Marr
  • Release date: March 2015
  • Publisher(s): For Dummies
  • ISBN: 9781118913239