KPIs are a tool for improvement in shared services. But who is managing KPIs properly and why do some shared services offer KPI management to their customers… and some don’t?
In a survey mainly large, complex shared services organizations, 77% of all respondents said they remain reliant on Microsoft Excel for accumulating, calculating, and displaying these metrics. Excel has it's uses, but usually it means the information is sitting on a computer or local network and isn't visible across the organization.
We also dug into what the top performing organizations looked like, and of all of the top performing respondents, 100% had internal performance management programs of a similar maturity to that which they were offering their customers, and 44% used more sophisticated tools other than, or in addition to, Microsoft Excel for the accumulation, calculation, and displaying of these metrics.
In other words, those who directly tie each KPI to business objectives have increased the number of total measurables in order to give them a deeper insight into what’s working well and what’s not.
What is KPI Management?
KPI management is the act of deciding what to measure, how to repeatedly measure, how to provide visibility, how to impact the result, how to track improvement plans, and how to refine scope with changing priorities
So how can you improve KPI management?
1. Create the framework.
It is essential that every KPI is tied to a specific business objective. Also, as different parts of the business will be affected by metrics in different ways (e.g. by task, action or outcome), each KPI must be understood at every stakeholder level
2. Provide consistent definitions.
The variety of stakeholders involved in cross-business processes need to be on the same page when it comes to defining your KPIs. By negotiating and gaining consensus across the board, you remove the potential for objections later down the line. As a minimum, each KPI should: Go beyond the name and description, i.e. it should provide an actionable answer to a business question Have a specific population, i.e. what is and what is not included in the measure
3. Collect and monitor performance.
It’s important that your KPI management program is established as part of the daily routine and is part of each member of staff’s job description. is will help define the cadence and accountability for collecting and monitoring performance.
4. Manage improvement plans.
t is crucial that you pick one method and stick with it. is is the only way you’ll be able to master the means to gain control over the system. Step Management methodologies:
5. Create scalable alternatives.
Microsoft Excel will always be with us… but make sure you are using it effectively! E.g. use pivot tables to allow for trend analysis by various attributes. Begin by implementing hypothesis-based improvements:
- Start with KISS approach
- Identify an idea and seek to prove it
- Look for evidence to support or refute the hypothesis, e.g. by using pareto charts and look at correlations
- Look holistically, e.g. ‘mind the gap’ between departments
- Understand the trends over time
And in order to ensure all potential cracks are covered, prioritise problem-solving skills, such as analytical thinking, arithmetic reasoning, pattern recognition and creative thinking. But be sure to investigate alternatives, e.g. software as a service (SaaS) or cloud technology. And finally, make sure to leverage human resources: Look across shared service enterprise for pockets of expertise Establish your own special interest group Reward the people doing this well
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