TUESDAY, NOVEMBER 13, 2018
Font Size
Implementation Basics Developing Key Performance Indicators

Developing Key Performance Indicators

Key performance indicators (KPIs) are critical to ensuring a project team has the performance data it needs to sustain improvements. With KPIs, a team can evaluate the success of a project against its established goals.

Types of Metrics

There are two types of metrics to consider when selecting KPIs for a project: outcome metrics and process metrics.

Outcome metrics provide insight into the output, or end result, of a process. Outcome metrics typically have an associated data-lag due to time passing before the outcome of a process is known. The primary outcome metric for a project is typically identified by project teams early on in their project work. This metric for most projects can be found by answering the question, “What are you trying to accomplish?”

Process metrics provide feedback on the performance of elements of the process as it happens. It is common for process metrics to focus on the identified drivers of process performance. Process metrics can provide a preview of process performance for project teams and allow them to work proactively to address performance concerns.

Example of Selected KPIs

Consider an example of KPIs for a healthcare-focused improvement project:

  • Project: optimizing hospital patient length of stay
  • Outcome metric: hospital patient length of stay (days)
  • Process metrics: discharge time of day (hh:mm); time discharge orders signed (hh:mm); time patient education completed (hh:mm); discussion of patient at daily discharge huddle (percentage of patients)

In the example above the project has one primary outcome metric and four process metrics that compose the KPIs the team is monitoring. Well-crafted improvement project KPIs will include both outcome metrics and process metrics. Having a mix of both provides the balance of information that the team needs to successfully monitor performance and progress towards goals.

Teams should develop no more than three to six KPIs for a project. Moving beyond six metrics can dilute the effects of the data and make it more challenging to effectively communicate the progress of a project.

Questions to Help Select KPIs

Common questions coaches can use with teams to generate conversation about potential KPIs include:

  • What does success look like?
  • How will it be known if performance is trending away from goals?
  • What data would the stakeholders and sponsors be most interested in?
  • What data is available to the team?

The 3Ms: Meaningful, Measurable and Manageable

Coaches should keep the three Ms of crafting KPIs in mind when working with teams.

  1. Meaningful: KPIs should be meaningful to project stakeholders. Developing metrics that those closest to the project team find useful without getting feedback from a broader group of stakeholders can be a recipe for stakeholder disengagement. The KPIs a team selects need to resonate with the stakeholders closest to the process and the problem. The team will know it is on the right track when it has KPIs that stakeholders want to know the current status of and are discussing progress toward the project goals with their colleagues. Meaningful KPIs make excellent additions to departmental data walls for use in daily huddles and to support the efforts of leaders to get out on the floor and speak directly with employees. leader rounding.
  2. Measurable: KPIs should be easily measurable. Sometimes teams can get stuck trying to identify the “perfect” metric for measuring progress toward their project goals. In this pursuit, the team may lose sight of metric options that are already available or automatically reported. Sustainable KPIs should be relatively easy to obtain updates for. If a metric requires time-consuming auditing, or is not readily available to the project team, groups should think twice before selecting it as a KPI. Data that is challenging or time-consuming to obtain is not likely to be regularly updated and reported to stakeholders. Providing timely and accurate updates on KPI performance is an excellent way to support the sustainability of improvements and spark conversations about additional opportunities to enhance processes and reach the team’s goals.
  3. Manageable: KPIs should include metrics that are within the sphere of management control and influence for the project team. If the team selects metrics that include measuring process elements that the team has no control over, then they are not going to be measuring what matters. Teams should select KPIs that are within the scope of their project, are reflective of a successful outcome and are performance drivers for their work. Sometimes nice-to-have or might-be-interesting metrics can sneak onto the KPI list for project teams. These additional metrics are not needed; the team should focus in on the metrics that will provide accurate feedback on its performance.

Summary

Remember that successful KPIs:

  • Include a balance of outcome metrics and process metrics.
  • Total three to six metrics.
  • Are developed with the 3Ms in mind.

Crafting KPIs is an important step to guide teams through a continuous improvement process. A coach needs to keep the team focused on what success looks like and how best to measure it.

Register Now

  • Stop this in-your-face notice
  • Reserve your username
  • Follow people you like, learn from
  • Extend your profile
  • Gain reputation for your contributions
  • No annoying captchas across site
And much more! C'mon, register now.

Leave a Comment

You must be logged in to post a comment.

Comments

A. Achour

Thank you for the interesting article which tempts to give an overview over the whole KPI process. I must admit, the article was written in such a clear and simple way that anyone can understand the concept of developing KPIs.
Having said that, I would like to add if I may, a couple of points that are very important and sensitive to a successful KPI development endeavor.
P1: Throughout my career, I have seen some companies identifying KPIs for an improvement project making the big mistake to assign them to someone who has no control or influence over them. A KPI owner must be the one doing the work related to that KPI, has full responsibility, is accountable for the outcome and is part of the organization developing the KPI in question.
P2: A KPI is a future target the organization wants to reach and is measured in % or a number. One can not just say “we should reduce the patient length of stay”, without adding by how many days, hours, minutes or % which is in turn interpreted into the amount of days, hours or minutes…
I don’t want to elaborate on further points because I believe that wasn’t the goal of this article but I believe these two points need to be addressed at this level because they could be very detrimental to any improvement project if misunderstood.

Chris Seider

Neat article and it didn’t even mention SMART as I was thinking during the article.

Well written.

Halle

Going to apply this to a different situation.



5S and Lean eBooks

Six Sigma Online Certification: White, Yellow, Green and Black Belt

Six Sigma Statistical and Graphical Analysis with SigmaXL
Six Sigma Online Certification: White, Yellow, Green and Black Belt
Lean and Six Sigma Project Examples
GAGEpack for Quality Assurance
Find the Perfect Six Sigma Job

Login Form