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Key Performance Indicators
Your Presenter David Guest
 Global Training Team
 Started with Action 2001
 Most Improved 2003
 Action Man Australasia 2006
 Best Client Results 2007
 Finalist Asia Pacific 2008
 Coach Of The Year
 Best Client Results
 Seminar Coach
 Marketing Coach
Are you Above or Below the Line?

Ownership
Accountable
Responsible

Blame
Excuses
Denial
The ONLY

Is the Failure
to Participate!
Give 100% and…
You will get 100% ...

...
To Make Sure You Get the Most Out of
Your Learning ... You Must Be Willing
to Have Some ...
To make sure you get the
most out of your learning…

I KNOW!
To make sure you get the most out
of your learning…

“ Isn't that
interesting?”
What you can expect from this seminar?

BFO’s …

Blinding Flashes of the Obvious…
What do I want from this
workshop?
Be as
specific as
YOU can ...
Agenda for the session
 What are Key Performance Indicators
 Why are KPIs important
 KPIs: A Balanced Scorecard
 How to implement KPIs
 Sample KPI Measurements and
Reports
What are KPI ’s?
“Quantifiable measurements that reflect
critical success factors of a business.”
• Key Drivers
• A handful of numbers “at a glance
view”
finger on the pulse
hot spots
act quickly!
How to use KPI's to run your business
Why are KPIs important?
Owners…
 are overwhelmed and distracted with
day to day activities and tasks
 concentrate on the tactical decisions
and neglect the strategic ones
 must make important decisions, quickly,
with greater consequences, and often
with limited information on hand
The Dashboard
Testing &
Measuring

Debtors
Days

Resources
Overdraft

Turnover
KPIs must be Strategic: How do
we differentiate from the
competition
 Define the market to be served
 Define the customer
 Define the critical internal processes
needed to capture and satisfy
customers
 What individual
capabilities are

and organizational
required
KPIs: Four Strategic Perspectives
 Customer
 Marketing and Sales

 Internal Business Processes
 Operations
 Suppliers

 Financial
 Resources
 Vision and Leadership
 Knowledge and Skills
 Growth/Innovation
Input versus Output:Balanced
Scorecard
FINANCIAL
Net Profit, Turnover, etc.

CUSTOMERS

BUSINESS
SYSTEMS

Client Survey,
Customers Service,
Client Retention %,
Percentage of referring
Clients etc.

Costs; Timeliness; Rework
%; Returns

RESOURCES
Plant and Equipment,
Working Capital;
Employee Satisfaction;
Knowledge and Skills
KPIs should look like a Balanced Scorecard
KPIs should focus on a single strategy
 Linked to the strategy
 Consistent
 Mutually reinforcing
Some Generic KPI Measures
Financial
Customer

Internal Business
Process
Learning and Growth

Return on Capital;
Cash Flow; Revenue;
Profit
Customer
Satisfaction;
Customer Retention;
market share
Quality; timeliness;
costs; returns; rework
Employee Retention;
Employee
Satisfaction;
The Cycle Of Business
Cause and Effect: The Balanced
Scorecard
KPIs: Four Types of
Measures
 Short and Long Term
 Internal (business processes) and
External (shareholders,customers)
 Leading and Lagging
 Objective (financial) and Subjective
(non-financial)
How should KPIs be used?
 Communication
 Informing
 Diagnostic
 Learning
 NOT controlling
Diagnostic versus Strategic
 Diagnostic measurements: monitor
whether something is in control.
 Strategic measurements: define a
strategy for competitive excellence and
future success

A Balanced Scorecard is a
strategic measurement system.
Sample Balanced Scorecard
Perspective

Goals

Drivers (How)

Measurements
(KPI’s)

Customer

Improve customer
satisfaction

Decrease lead time

Average Lead Time

Deliver on time

% deliveries on time

Reduce complaints

Number of
Complaints
Average Cycle Time

Internal Business

Continuously
improve business
processes

Decrease Cycle
Time

Innovation and
Learning

Continuously
Improve Financial
Performance

Deliver new
Products and
Services

Increase Productivity
Decrease Costs

Output per employee
Average Unit costs

Increase Sales
growth

Growth Rate in
Sales

Increase Market
Share

Financial

Increase Quality

# of Defects; %
Rework

Market Share

Increase ROI
Increase sales of
new products and
services
Reduce development
time

ROI
% of sales from new
products and
services
Time from design to
implementation
KPIs: The Big Picture
Sales

Operations
Production
Suppliers

Finance
and Admin

Human
Resources

 

Marketing

Innovation
and
Learning

Attract and retain clients

Stakeholders
Clients

Build and maintain client relationships and loyalty
Provide services that satisfy client ’s needs and lifestyle objectives

Provision of secure employment

Team

Provision of enjoyable happy work environment, that ’s aligned with corporate values
Provide career and professional development opportunities
Provide succession and exit plan for existing shareholders
Provide capital growth in asset and return on investment through dividend streams

Shareholders
How to implement KPIs
Step 1: Define Strategic Specifics
 Define Your Strategy
 Vision, Mission, Culture and Values
reflect strategy
 Set Goals
 Most important business objectives (e.g.
improve customer satisfaction)
 What “drivers” are critical to success (e.g.
decrease lead time)
 What impacts “driver” results (leadership,
training, systems)
How to implement KPIs
Step 1: Define Strategic Specifics
(Cont)
 Clarify the strategy
 Align Team members on strategic
issues
 Identify Barriers
How to implement KPIs
Step 2: Audit Existing Measures
 Assess strategic fit
 Identify what data is available
 Review Measurement Processes
 Accuracy
 Timeliness

 Identify Gaps
How to implement KPIs
Step 3: Develop New Measures
 Bridge the gaps, examples of strategic
data often missing:
 Employee Satisfaction Survey
 Customer Satisfaction Survey
 Rework %
 On-time Delivery %
How to implement KPIs
Step 3: Develop New Measures
 Measures must reflect performance and
progress of the business
 Must be quantifiable
 Must be compared to another number
 last year
 budget/goal
 trend

 Can be acted upon
How to implement KPIs
Step 3: Develop New Measures
 KPI title: Employee Turnover
 Defined: number of employees who resign or
are terminated for any reason divided by the
number of employees at the beginning of the
year. Reductions in force excluded
 Measured: Payroll termination report by
reason
 Goal: Reduce turnover by 10% (from 16.6% to
15%); FY 2012 objective is to achieve an
employee turnover 15 %.
How to implement KPIs
Step 4: Analyze and Report
 Easy to Read
 One Page Summary
 Graphs
KPI Template

Curr Mth

Sales 1
Sales 2
Sales 3
Total Sales
Cost 1
Cost 2
Cost 3
Total COGS
Gros s Profit
Gros s Margin
Sales & Mktg.
Admnin.
Other 1
Other 2
Facilities
Total cos ts
EBITDA(Op.Inc)
Op. Margin
Interes t/Dep/Amort
Net Profit
FTE 1
FTE 2
FTE Total
Inventory
Inventory Turover
Back Orders
Accts Rec
Av Coll. Days
Quality Meas.1
Quality Meas.2
Production Meas. 1
Production Meas.2
New Custom ers
Total Custom ers
Forecas t this month
Work in Progress
Project 1
Projects Status
Budget and Delivery

Sample KPI Report
Template
Sam e M LY Com paris on % Sales

F 30 out
Mgr.

Budget Mth YTD Actual %Sale s

F 60 out
Project 2

Mgr.

Project 3

Mgr.

Project 4

Com parison

F 120 out

F 90 out

YTD LY Act % Sale s

F 150 out

Mgr.

Project 5

Mgr.

Budge t YTD
Sample KPI Trend Report
Sample Trend Report
How to implement KPIs
Step 5: Continuous Improvement
 Strategy based on set priorities
 SMART Goals
 Assign Accountability
 Track Improvement
 Set New Goals
Workshop
 Review your company ’ s Vision and
Mission
 Write down the areas in your business
that require KPI ’ s
KPIs: The Big Picture
Sales

Operations
Production
Suppliers

Finance
and Admin

Human
Resources

 

Marketing

Innovation
and
Learning

Attract and retain clients

Stakeholders
Clients

Build and maintain client relationships and loyalty
Provide services that satisfy client ’s needs and lifestyle objectives

Provision of secure employment

Team

Provision of enjoyable happy work environment, that ’s aligned with corporate values
Provide career and professional development opportunities
Provide succession and exit plan for existing shareholders
Provide capital growth in asset and return on investment through dividend streams

Shareholders
Sample Balanced Scorecard
Perspective
Customer

Internal Business

Financial

Innovation and
Learning
Sample Balanced Scorecard
Perspective

Goals

Customer

Improve customer
satisfaction

Internal Business

Continuously
improve business
processes

Financial

Continuously
Improve Financial
Performance

Innovation and
Learning

Deliver new
Products and
Services
Sample Balanced Scorecard
Perspective

Goals

Drivers (How)

Customer

Improve customer
satisfaction

Decrease lead time

Internal Business

Financial

Continuously
improve business
processes

Continuously
Improve Financial
Performance

Deliver on time
Reduce complaints
Decrease Cycle
Time
Increase Quality
Increase Productivity
Decrease Costs
Increase Sales
growth
Increase Market
Share

Innovation and
Learning

Deliver new
Products and
Services

Increase ROI
Increase sales of
new products and
services
Reduce development
time
Sample Balanced Scorecard
Perspective

Goals

Drivers (How)

Measurements
(KPI’s)

Customer

Improve customer
satisfaction

Decrease lead time

Average Lead Time

Deliver on time

% deliveries on time

Reduce complaints

Number of
Complaints
Average Cycle Time

Internal Business

Continuously
improve business
processes

Decrease Cycle
Time

Innovation and
Learning

Continuously
Improve Financial
Performance

Deliver new
Products and
Services

Increase Productivity
Decrease Costs

Output per employee
Average Unit costs

Increase Sales
growth

Growth Rate in
Sales

Increase Market
Share

Financial

Increase Quality

# of Defects; %
Rework

Market Share

Increase ROI
Increase sales of
new products and
services
Reduce development
time

ROI
% of sales from new
products and
services
Time from design to
implementation
Sample KPI Measures:
Marketing and Sales
 Market Share

 Profit Per Customer

 Leads by Source

 Sales by Product Line

 Number of Prospects  Number of
Transactions/Customer
 Conversion Ratio
 Customer Satisfaction
 Average Dollar Sale
Sample KPI Measures:
Marketing and Sales
 Number of new
customers
 Brand Awareness
 Value of Brand

 Sales Mix
 Customer
Profitability
 Number of Orders

 Number of
Customers

 Customer Retention

 Referrals

 Lifetime Value of a
customer

 Reasons for losses
Sample KPI Measure:
Financial
 Dividends

 Profit Margin

 Current Ratio

 Gross margin

 Quick Ratio

 Revenue/Expense Ratio

 Credit rating

 Variable vs non-variable
expenses

 Days Sales
Outstanding

 Return on Investment

 Revenue
Sample KPI Measures:
Financial
 Cash in Bank

 Inventory

 Retained Earnings

 Aged Accounts
Receivable

 Cost of Goods Sold
 Inventory Turns/Year
 Cash Flow

 Aged Accounts Payable
 Sales Per Square Foot
 EBIT

 Return on Capital

 Capital Expenditures

 Bank Overdraft

 Debt to Equity Ratio
Sample KPI Measures:
Financial
 R&D Expenditures

 Fixed Assets

 Training
Expenditures

 Current Liabilities

 Marketing
Expenditures
 Depreciation

 Interest Expense
 Bad Debts
 Discounts
Given/Taken
Sample KPI Measures:
Operations/Production
 Quality Data

 Capacity Utilization

 Timeliness

 Safety

 Response Time
 Re-work (#,%)

 # Workers Comp
Claims
 Days lost

 Cost per unit

 Environmental

 Number of
Employees

 Back orders
 Costs
Sample KPI Measures:
Operations/Production


Post Sales Service
 Warranty Claims (#,%)
 Repairs
 Returns
 Defects



Number of Complaints



Value of Customer Complaints



# orders failed before delivery



# Orders not delivered on
time

 Work in Process
 Labour Hours
 Overtime
 Cycle Time
 Downtime
 Maintenance Costs
Sample KPI Measures:
People
 Employee Turnover

 Drivers of Performance

 Employee
Satisfaction

 Drivers of Capabilities
 Learning

 Output per employee

 Skills mix

 Sales per employee
 Productivity per
employee

 Core Values

 Quality of Outputs

 Customer focus
 Innovation
Sample KPI Measures:
People

 Number of
Employees

 # of managers

 Hours or $ of
training per
employee

 Manager/employee
ratio

 Ratio direct to
overhead employees

 Absenteeism

 Cost per new hire

 # new employees

 % employees fully
trained
Sample KPI Measures:
Innovation
 Revenue from new products
 Revenue from new market segments
 Revenue from new geography
 Number of new customers
 Time to market for new products/service
 R&D expense
Sample KPI Measures:
Suppliers

Satisfaction with Suppliers

Supplier Satisfaction

 Responsiveness
 Costs compared with
competition

 Overall Satisfaction:
Opportunity for profits
while providing quality

 On-time Delivery

 Responsiveness

 Overall
Satisfaction/Value

 Payment

 Defects (#,%)
 Credit terms
 Number of Suppliers
The Top Ten Drivers of
Business Performance*
 Low levels of late
deliveries to customers

 Higher Capital
Expenditures

 Higher employee
training expenditure

 Higher R&D Expenditure

 % of workforce trained

 Higher Stock Turns

 Low absenteeism rate

 Higher Cash Balances

 Higher Marketing
Expenditures

 Lower Debt Levels (more
short term than long
term)

* Source: Cranfield School of Management, UK
Four Things Every Owner
Should Know
 The profitability of the business
depends on how well the employees
consistently perform critical activities.
 Employees perform best when they
understand how their performance
affects the bottom line, and how their
performance is measured .
Four Things Every Owner
Should Know
 Small changes in critical areas can
have a great impact on the bottom line.
 What gets measured gets done, and
what gets rewarded gets done again.
The Dashboard
Testing &
Measuring

Debtors
Days

Resources
Overdraft

Turnover
How to use KPI's to run your business
Now It ’s Time To

More Related Content

How to use KPI's to run your business

  • 2. Your Presenter David Guest  Global Training Team  Started with Action 2001  Most Improved 2003  Action Man Australasia 2006  Best Client Results 2007  Finalist Asia Pacific 2008  Coach Of The Year  Best Client Results  Seminar Coach  Marketing Coach
  • 3. Are you Above or Below the Line? Ownership Accountable Responsible Blame Excuses Denial
  • 4. The ONLY Is the Failure to Participate! Give 100% and… You will get 100% ... ...
  • 5. To Make Sure You Get the Most Out of Your Learning ... You Must Be Willing to Have Some ...
  • 6. To make sure you get the most out of your learning… I KNOW!
  • 7. To make sure you get the most out of your learning… “ Isn't that interesting?”
  • 8. What you can expect from this seminar? BFO’s … Blinding Flashes of the Obvious…
  • 9. What do I want from this workshop? Be as specific as YOU can ...
  • 10. Agenda for the session  What are Key Performance Indicators  Why are KPIs important  KPIs: A Balanced Scorecard  How to implement KPIs  Sample KPI Measurements and Reports
  • 11. What are KPI ’s? “Quantifiable measurements that reflect critical success factors of a business.” • Key Drivers • A handful of numbers “at a glance view” finger on the pulse hot spots act quickly!
  • 13. Why are KPIs important? Owners…  are overwhelmed and distracted with day to day activities and tasks  concentrate on the tactical decisions and neglect the strategic ones  must make important decisions, quickly, with greater consequences, and often with limited information on hand
  • 15. KPIs must be Strategic: How do we differentiate from the competition  Define the market to be served  Define the customer  Define the critical internal processes needed to capture and satisfy customers  What individual capabilities are and organizational required
  • 16. KPIs: Four Strategic Perspectives  Customer  Marketing and Sales  Internal Business Processes  Operations  Suppliers  Financial  Resources  Vision and Leadership  Knowledge and Skills  Growth/Innovation
  • 17. Input versus Output:Balanced Scorecard FINANCIAL Net Profit, Turnover, etc. CUSTOMERS BUSINESS SYSTEMS Client Survey, Customers Service, Client Retention %, Percentage of referring Clients etc. Costs; Timeliness; Rework %; Returns RESOURCES Plant and Equipment, Working Capital; Employee Satisfaction; Knowledge and Skills
  • 18. KPIs should look like a Balanced Scorecard
  • 19. KPIs should focus on a single strategy  Linked to the strategy  Consistent  Mutually reinforcing
  • 20. Some Generic KPI Measures Financial Customer Internal Business Process Learning and Growth Return on Capital; Cash Flow; Revenue; Profit Customer Satisfaction; Customer Retention; market share Quality; timeliness; costs; returns; rework Employee Retention; Employee Satisfaction;
  • 21. The Cycle Of Business
  • 22. Cause and Effect: The Balanced Scorecard
  • 23. KPIs: Four Types of Measures  Short and Long Term  Internal (business processes) and External (shareholders,customers)  Leading and Lagging  Objective (financial) and Subjective (non-financial)
  • 24. How should KPIs be used?  Communication  Informing  Diagnostic  Learning  NOT controlling
  • 25. Diagnostic versus Strategic  Diagnostic measurements: monitor whether something is in control.  Strategic measurements: define a strategy for competitive excellence and future success A Balanced Scorecard is a strategic measurement system.
  • 26. Sample Balanced Scorecard Perspective Goals Drivers (How) Measurements (KPI’s) Customer Improve customer satisfaction Decrease lead time Average Lead Time Deliver on time % deliveries on time Reduce complaints Number of Complaints Average Cycle Time Internal Business Continuously improve business processes Decrease Cycle Time Innovation and Learning Continuously Improve Financial Performance Deliver new Products and Services Increase Productivity Decrease Costs Output per employee Average Unit costs Increase Sales growth Growth Rate in Sales Increase Market Share Financial Increase Quality # of Defects; % Rework Market Share Increase ROI Increase sales of new products and services Reduce development time ROI % of sales from new products and services Time from design to implementation
  • 27. KPIs: The Big Picture Sales Operations Production Suppliers Finance and Admin Human Resources   Marketing Innovation and Learning Attract and retain clients Stakeholders Clients Build and maintain client relationships and loyalty Provide services that satisfy client ’s needs and lifestyle objectives Provision of secure employment Team Provision of enjoyable happy work environment, that ’s aligned with corporate values Provide career and professional development opportunities Provide succession and exit plan for existing shareholders Provide capital growth in asset and return on investment through dividend streams Shareholders
  • 28. How to implement KPIs Step 1: Define Strategic Specifics  Define Your Strategy  Vision, Mission, Culture and Values reflect strategy  Set Goals  Most important business objectives (e.g. improve customer satisfaction)  What “drivers” are critical to success (e.g. decrease lead time)  What impacts “driver” results (leadership, training, systems)
  • 29. How to implement KPIs Step 1: Define Strategic Specifics (Cont)  Clarify the strategy  Align Team members on strategic issues  Identify Barriers
  • 30. How to implement KPIs Step 2: Audit Existing Measures  Assess strategic fit  Identify what data is available  Review Measurement Processes  Accuracy  Timeliness  Identify Gaps
  • 31. How to implement KPIs Step 3: Develop New Measures  Bridge the gaps, examples of strategic data often missing:  Employee Satisfaction Survey  Customer Satisfaction Survey  Rework %  On-time Delivery %
  • 32. How to implement KPIs Step 3: Develop New Measures  Measures must reflect performance and progress of the business  Must be quantifiable  Must be compared to another number  last year  budget/goal  trend  Can be acted upon
  • 33. How to implement KPIs Step 3: Develop New Measures  KPI title: Employee Turnover  Defined: number of employees who resign or are terminated for any reason divided by the number of employees at the beginning of the year. Reductions in force excluded  Measured: Payroll termination report by reason  Goal: Reduce turnover by 10% (from 16.6% to 15%); FY 2012 objective is to achieve an employee turnover 15 %.
  • 34. How to implement KPIs Step 4: Analyze and Report  Easy to Read  One Page Summary  Graphs
  • 35. KPI Template Curr Mth Sales 1 Sales 2 Sales 3 Total Sales Cost 1 Cost 2 Cost 3 Total COGS Gros s Profit Gros s Margin Sales & Mktg. Admnin. Other 1 Other 2 Facilities Total cos ts EBITDA(Op.Inc) Op. Margin Interes t/Dep/Amort Net Profit FTE 1 FTE 2 FTE Total Inventory Inventory Turover Back Orders Accts Rec Av Coll. Days Quality Meas.1 Quality Meas.2 Production Meas. 1 Production Meas.2 New Custom ers Total Custom ers Forecas t this month Work in Progress Project 1 Projects Status Budget and Delivery Sample KPI Report Template Sam e M LY Com paris on % Sales F 30 out Mgr. Budget Mth YTD Actual %Sale s F 60 out Project 2 Mgr. Project 3 Mgr. Project 4 Com parison F 120 out F 90 out YTD LY Act % Sale s F 150 out Mgr. Project 5 Mgr. Budge t YTD
  • 38. How to implement KPIs Step 5: Continuous Improvement  Strategy based on set priorities  SMART Goals  Assign Accountability  Track Improvement  Set New Goals
  • 39. Workshop  Review your company ’ s Vision and Mission  Write down the areas in your business that require KPI ’ s
  • 40. KPIs: The Big Picture Sales Operations Production Suppliers Finance and Admin Human Resources   Marketing Innovation and Learning Attract and retain clients Stakeholders Clients Build and maintain client relationships and loyalty Provide services that satisfy client ’s needs and lifestyle objectives Provision of secure employment Team Provision of enjoyable happy work environment, that ’s aligned with corporate values Provide career and professional development opportunities Provide succession and exit plan for existing shareholders Provide capital growth in asset and return on investment through dividend streams Shareholders
  • 41. Sample Balanced Scorecard Perspective Customer Internal Business Financial Innovation and Learning
  • 42. Sample Balanced Scorecard Perspective Goals Customer Improve customer satisfaction Internal Business Continuously improve business processes Financial Continuously Improve Financial Performance Innovation and Learning Deliver new Products and Services
  • 43. Sample Balanced Scorecard Perspective Goals Drivers (How) Customer Improve customer satisfaction Decrease lead time Internal Business Financial Continuously improve business processes Continuously Improve Financial Performance Deliver on time Reduce complaints Decrease Cycle Time Increase Quality Increase Productivity Decrease Costs Increase Sales growth Increase Market Share Innovation and Learning Deliver new Products and Services Increase ROI Increase sales of new products and services Reduce development time
  • 44. Sample Balanced Scorecard Perspective Goals Drivers (How) Measurements (KPI’s) Customer Improve customer satisfaction Decrease lead time Average Lead Time Deliver on time % deliveries on time Reduce complaints Number of Complaints Average Cycle Time Internal Business Continuously improve business processes Decrease Cycle Time Innovation and Learning Continuously Improve Financial Performance Deliver new Products and Services Increase Productivity Decrease Costs Output per employee Average Unit costs Increase Sales growth Growth Rate in Sales Increase Market Share Financial Increase Quality # of Defects; % Rework Market Share Increase ROI Increase sales of new products and services Reduce development time ROI % of sales from new products and services Time from design to implementation
  • 45. Sample KPI Measures: Marketing and Sales  Market Share  Profit Per Customer  Leads by Source  Sales by Product Line  Number of Prospects  Number of Transactions/Customer  Conversion Ratio  Customer Satisfaction  Average Dollar Sale
  • 46. Sample KPI Measures: Marketing and Sales  Number of new customers  Brand Awareness  Value of Brand  Sales Mix  Customer Profitability  Number of Orders  Number of Customers  Customer Retention  Referrals  Lifetime Value of a customer  Reasons for losses
  • 47. Sample KPI Measure: Financial  Dividends  Profit Margin  Current Ratio  Gross margin  Quick Ratio  Revenue/Expense Ratio  Credit rating  Variable vs non-variable expenses  Days Sales Outstanding  Return on Investment  Revenue
  • 48. Sample KPI Measures: Financial  Cash in Bank  Inventory  Retained Earnings  Aged Accounts Receivable  Cost of Goods Sold  Inventory Turns/Year  Cash Flow  Aged Accounts Payable  Sales Per Square Foot  EBIT  Return on Capital  Capital Expenditures  Bank Overdraft  Debt to Equity Ratio
  • 49. Sample KPI Measures: Financial  R&D Expenditures  Fixed Assets  Training Expenditures  Current Liabilities  Marketing Expenditures  Depreciation  Interest Expense  Bad Debts  Discounts Given/Taken
  • 50. Sample KPI Measures: Operations/Production  Quality Data  Capacity Utilization  Timeliness  Safety  Response Time  Re-work (#,%)  # Workers Comp Claims  Days lost  Cost per unit  Environmental  Number of Employees  Back orders  Costs
  • 51. Sample KPI Measures: Operations/Production  Post Sales Service  Warranty Claims (#,%)  Repairs  Returns  Defects  Number of Complaints  Value of Customer Complaints  # orders failed before delivery  # Orders not delivered on time  Work in Process  Labour Hours  Overtime  Cycle Time  Downtime  Maintenance Costs
  • 52. Sample KPI Measures: People  Employee Turnover  Drivers of Performance  Employee Satisfaction  Drivers of Capabilities  Learning  Output per employee  Skills mix  Sales per employee  Productivity per employee  Core Values  Quality of Outputs  Customer focus  Innovation
  • 53. Sample KPI Measures: People  Number of Employees  # of managers  Hours or $ of training per employee  Manager/employee ratio  Ratio direct to overhead employees  Absenteeism  Cost per new hire  # new employees  % employees fully trained
  • 54. Sample KPI Measures: Innovation  Revenue from new products  Revenue from new market segments  Revenue from new geography  Number of new customers  Time to market for new products/service  R&D expense
  • 55. Sample KPI Measures: Suppliers Satisfaction with Suppliers Supplier Satisfaction  Responsiveness  Costs compared with competition  Overall Satisfaction: Opportunity for profits while providing quality  On-time Delivery  Responsiveness  Overall Satisfaction/Value  Payment  Defects (#,%)  Credit terms  Number of Suppliers
  • 56. The Top Ten Drivers of Business Performance*  Low levels of late deliveries to customers  Higher Capital Expenditures  Higher employee training expenditure  Higher R&D Expenditure  % of workforce trained  Higher Stock Turns  Low absenteeism rate  Higher Cash Balances  Higher Marketing Expenditures  Lower Debt Levels (more short term than long term) * Source: Cranfield School of Management, UK
  • 57. Four Things Every Owner Should Know  The profitability of the business depends on how well the employees consistently perform critical activities.  Employees perform best when they understand how their performance affects the bottom line, and how their performance is measured .
  • 58. Four Things Every Owner Should Know  Small changes in critical areas can have a great impact on the bottom line.  What gets measured gets done, and what gets rewarded gets done again.
  • 61. Now It ’s Time To

Editor's Notes

  1. 3 States going in Trusting exciting Engaged, Bob Dataplex activity quota trusting Working at the footy exciting Learning to fly Engaged Landing realised I can do this addicted Decision to leave Proved myself Motivated to act Coming out motivated to act, Decisive, Determined
  2. Above and below the line. Blame, do pointing exercise. Excuses, how many have kids that are experts at this … where did they learn it from ? Denial … book titled, Denial is not a river in Egypt … Polite way of saying you’re lying to yourself. Above, point out OWN SHIP Accountable for Results Responsible for Actions IMPORTANT … Get agreement that everyone is willing to play above the line for today … Below the line are the REASONS Above the line is RESULTS 95% of Business Owners and their teams play BELOW THE LINE! Total 5 Mins
  3. Learn to walk by falling down. Get agreement that everyone is willing to play 100% today at least Let’s try a little group participation – Hand Exercise Participation – as long as you participate you are getting a result – sometimes it is not the result that you want, but if it is a result, then you have learned something – and you now have the opportunity to use that knowledge to do better in the future –those with the right knowledge and the skills to apply it will be the winners of the future Remember the turtle – in order to move forward you have to stick your neck out – so stick your neck out, take a risk, participate and learn and move forward
  4. Get it called out with a SMILE … 1 Min
  5. Anyone with teenage kids … experts at this … Yeah I Know Mom … When older do it a little more politely … cross arms and say it to yourself … “Yeah, I know…” But, this approach KILLS the possibility that maybe you can learn something from this conversation. Get agreement everyone will treat today as a totally new experience Introduce ISN’T THAT INTERESTING … ? Always keep an open mind to the possibilities
  6. Anyone with teenage kids … experts at this … Yeah I Know Mom … When older do it a little more politely … cross arms and say it to yourself … “Yeah, I know…” But, this approach KILLS the possibility that maybe you can learn something from this conversation. Get agreement everyone will treat today as a totally new experience Introduce ISN’T THAT INTERESTING … ? Always keep an open mind to the possibilities
  7. Explain the BFO is the “aha” moment – and our role is to help stimulate some of these for the audience.
  8. Make sure to target them to work and the business … Give 3 minutes to do the exercise but them them run as long as it takes. List 11 things … Start background music that has no words whilst doing writing. Introduce to changing pen colors and CHEATING – Market research. Get everyone in the room to call out one each to start and then get any extra’s. Total 8 Mins.
  9. Quantifiable measurements that reflect critical success factors of a business. Key Drivers that have a major impact on the performance of the business A handful of numbers that give the owner an “at a glance” view of the business Keep their finger on the pulse of the business Identify hot spots that need attention Act quickly to drive the business forward
  10. KPI’s are very strategic. Before one can set KPI’s, the strategy of the business has to be clearly defined and understood. For a desired outcome, the things that get measured may not be obvious. Take the example of sales people. Most sales people are measured on turnover but the business objective is to make profit. Eg sales rep: calls vs, # of sales, vs turnover, vs profit,
  11. Can’t say “want more profit” and then say “make the sale whatever it takes” If the strategy is to get more “A” customers, then the KPI can’t just be the number of orders, irrespective of the type of customer Customer satisfaction/number of orders despatched on time/# of customer complaints
  12. So cutting staff training, staff amenities and reducing the number of staff may make the business a less compelling place to work, a less compelling place to shop (as staff morale drops) and a less compelling place to invest.
  13. Leading: test & Measure, forecasting Lagging: Financials Objective: figures eg no of call made Subjective: forecast of % that will convert
  14. Diagnostic = the number of calls made by the salesman in a week Strategic = the quality of the calls made by the salesman
  15. Break into pairs and role-play the positioning PPT with presentation folders.